Pandemic didn’t change the rules for layoffs
Sometimes, people who should listen just don’t. Or they listen, but don’t believe you. Others believe, but hope triumphs over reason.
I feel that way about the fuss being made by the decision last week in Jessica Coutinho against Ocular Health by Ontario Superior Court Justice David Broad.
From the outset of the pandemic, I have told my clients — employers and employees — and readers that laying off employees was a constructive dismissal. When the provincial government extended the permissible layoff period in the Ontario Employment Standards Act through its infectious disease emergency leave (IDEL) legislation, I reiterated that. In fact, I and two other lawyers from my firm were among 10 lawyers in meetings with the Ministry of Labour obtaining input on the ESA and then announcing these changes.
The Ministry made clear, at that time, and I did in turn, that IDEL legislation and permissible layoffs under the ESA had no impact whatsoever on employees’ “common law” rights to treat the layoff as a dismissal.
Despite this, various employer lawyers, in responding to sometimes credulous employees’ claims, reiterated that the layoffs (or reduced wages) were permissible under IDEL. Perhaps some of these lawyers actually believed what they were writing. But they should have known better.
The issue of whether a layoff under the IDEL legislation is a constructive dismissal, over a year into the pandemic, finally reached its first judge.
The court properly reviewed the ESA itself, which states in s8(1) that no civil remedy is affected by the ESA. It also looked at the Ministry of Labour’s own publication, which makes clear that its rules “affects what constitutes a constructive dismissal under the ESA. These Rules do not address what constitutes a constructive dismissal at common law.”
Justice Broad found that the “Ministry’s Guide is of assistance by offering insight into the Ministry’s intention in promulgating the provision of the IDEL Regulation respecting constructive dismissal …”
Jessica Coutinho was laid off on May 1, 2020, and had her pay suspended on May 29. She issued a statement of claim three days later, something I recommend to every employee to preserve their rights. Ocular argued that she was on an IDEL protected emergency leave, so had no recourse — the same argument made by tens of thousands of Ontario employers over the last year.
The court held that IDEL applies to non-unionized employees whose employers reduce their hours or wages temporarily for reasons related to COVID during the period of the legislation. Justice Broad concluded that IDEL did not protect employers from constructive dismissal actions. “It is well-established at common law, an employer has no right to lay off an employee and that, absent an agreement to the contrary, a unilateral layoff by an employer is a … constructive dismissal.”
The court went on to discuss the more controversial point: “A claim that the employee has condoned a breach is a defence to a claim of constructive dismissal.”
Therein lies the real issue facing the Canadian workforce, both employers and employees. Do you lose your right to sue when you do nothing after being laid off ?
If you recall the situation a year ago, the entire economy had shut down. Virtually all businesses closed and employees were laid off, many of whom were fearful they would not find work again. In the main, they held tenaciously to their employment and did not risk ending it by claiming constructive dismissal.
Now that the economy is opening up again and jobs are more available, they have no such trepidation and are ready to sue those former employers who did not recall them for constructive dismissal. Or they are ready to sue employers who did recall them for their lost income during the period of their layoff. Some lawyers are advising employees that they can. I am seeing such cases in my own office.
I believe that advice — that those employees can sue — is wrong. In my view, when the layoff or reduction in wages or hours occurred, employees had a choice: They could either refuse to accept it and sue, or do nothing and condone it, thereby accepting the change, and thereby being unable to sue later. Their chance to sue revives if others are recalled and they are not, or again, at the end of the period permitted for layoff under the ESA, which is still a very long time away.
I had one lawyer suing one of my clients immediately withdraw her offer to settle in the wake of the Coutinho decision, believing that it gave her a stronger case. Many lawyers may think that. However, her client accepted the initial layoff without a peep and only sued months later. In my view, that case is doomed and Coutinho does not change that.
My only caution is that no case where the employee accepted the initial layoff and did nothing for months, and then sued, has yet to reach the courts. But, like the Coutinho decision, I can foretell what will occur when it does.
The more interesting question will be the fate of employees who did protest immediately and continuously, but did nothing else in the way of issuing a lawsuit. Did their protests create the ability to sue, many months later? The answer to that question, too, is yet to be decided.
That is one wonderful aspect of employment law. It is ever evolving.
Got a question about employment law during COVID-19? Write to Howard at levitt@levittllp.com. Howard Levitt is senior partner of LSCS Law, employment and labour lawyers. He practises employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.