As discussed previously on our blog here, on May 29, 2020, Ontario Regulation 228/20 (“the Regulation”) was passed under the Employment Standards Act (“ESA”). The Regulation amended the ESA to provide that temporary layoffs, including a temporary reduction or elimination of hours or a reduction of wages due to COVID-19 during the COVID-19 period, does not constitute a constructive dismissal under the ESA. In our blog, we noted that the Regulation does not affect an employees’ rights under the common law to claim constructive dismissal as a result of layoff, reduced hours, or reduced compensation.
On April 27, 2021, the Superior Court of Justice, in Coutinho v Ocular Health Centre Ltd., 2021 ONSC 3076 confirmed that the Regulation does not affect an employees’ rights under the common law to claim constructive dismissal for unilaterally imposed layoffs.
Jessica Coutinho (“Coutinho”) worked at Ocular Health Centre Ltd. (“Ocular”) as an office manager at its Cambridge clinic.
Ocular’s two (2) principals and two (2) of its ophthalmologists who practiced at the Cambridge clinic became embroiled in a dispute about how to run the clinic. The dispute resulted in one of the principals changing the locks to the Cambridge clinic after hours on April 30, 2020.
On May 1, 2020, Coutinho attended work but was informed by Ocular that she would not be allowed entry. On May 29, 2020 Ocular wrote to Coutinho advising her that the Cambridge clinic was closing as Ocular found it necessary to temporarily reduce its workforce. Ocular informed Coutinho that she was being placed on temporary layoff.
On June 1, 2020 Coutinho brought an action against Ocular for constructive dismissal. Consequently, the court was left to determine whether the Regulation precluded Coutinho’s civil claim for constructive dismissal.
Coutinho argued that the Regulation did not affect her common law right to pursue a claim for constructive dismissal. Ocular argued that the Regulation should be extended to apply to constructive dismissals at common law, given the unprecedent impact COVID-19 has had on employers and employees.
In determining whether the Regulation precludes a plaintiff’s common law right to sue for constructive dismissal, the court first considered section 8(1) of the ESA, which provides that “no civil remedy of an employee against his or her employer is affected by this Act.” The court then considered the Ministry of Labour’s Guide to the Employment Standards Act, which states that the Regulation does not apply to what constitutes a constructive dismissal at common law.
The court concluded that Ocular’s unilaterally imposed layoff constituted a constructive dismissal at common law.
Implications for employers
This decision confirms that the Regulation does not preclude an employee from claiming that they have been constructively dismissed at common law when an employer imposes a unilateral layoff. Employers should seek assistance of legal counsel in determining the liability they may face and their available options when considering layoffs, or reducing employees’ working hours or pay.
The foregoing is for informational purposes only and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyers by email or telephone.