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Ontario Superior Court Revisits Whether COVID-19 Layoff is Constructive Dismissal

By
Samantha A. Morden
Date
June 9, 2021
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Ontario Superior Court Revisits Whether COVID-19 Layoff is Constructive Dismissal

In its April 27, 2021 decision in Coutinho v Ocular Health Centre (2021 ONSC 3076), the Ontario Superior Court found a COVID-19-related temporary layoff was a constructive termination. Understandably, employers were concerned about the impact this would have on their liability as a result of COVID-19 layoffs that many of them engaged in.

We now have a new decision that is in completed opposition to the decision in Coutinho. In a decision released June 7, 2021, Ferguson J. of the Ontario Superior Court found Coutinho to be wrongly decided. In his decision in Taylor v Hanley Hospitality Inc. (2021 ONSC 3135), Ferguson J. discussed the principles of the Employment Standards Act (ESA) in relation to temporary layoffs, finding that temporary layoff provisions displace the common law rule that a layoff is a termination in most cases. Traditionally, the position of Ontario courts was that certain activities are permitted by statute but not the common law. Ferguson J. points out the absurdity of this traditional position, where an employee on a protected leave of absence under the ESA is at the same time terminated by constructive dismissal in common law. He notes that such a position offends the rules of statutory interpretation in giving rise to a result that renders legislation meaningless. In support of its divergence from Coutinho, the Court refers to the principle outlined by the Ontario Court of Appeal’s decision in Elsegood that statute can and does displace the common law. Ferguson J. concludes that he was not bound by the decision in Coutinho and encourages judges not to follow it if they agree it was wrongly decided.

Interestingly, the decision in Coutinho is being appealed. It is to be determined whether this traditional line of reasoning will be upheld or be recognized for the absurdity that Ferguson J. argues it is in Taylor. Despite this being an Ontario case, it is expected that the decision arising from the appeal of Coutinho will be persuasive in Alberta.

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