If IDEL has ended, you have been constructively dismissed

If you were placed on temporary layoff by your employer when the COVID-19 pandemic closures started in March 2020 and you are still not back to work, you have been constructively dismissed. You need to protect your rights immediately before you walk away with nothing.

As of July 30^th, 2022, your employer cannot use the pandemic as an excuse to keep you on long-term leave as part of the Infectious Disease Emergency Leave (“IDEL”). Some employer protections that were put in place during the pandemic are no longer valid. This opens the door to the statutory constructive dismissal under the Ontario Employment Standards Act, 2000 (“ESA”), in addition to common law constructive dismissal claims..

If you are still on temporary layoff your window for common law constructive dismissal claims and wrongful dismissal damages may be closing, which means you will have no option for legal recourse.

When a layoff occurs, there is a two-year limitation period during which an employee can pursue a constructive dismissal claim and wrongful dismissal damages. Although Ontario suspended the running of limitation and time periods in March 2020, effectively extending the limitation period for employment matters between March 16, 2020, and September 14, 2020, by six months, now is the time to act. More urgently, the court may also consider your inaction as acquiescence, which leaves you with a much shorter window to act, especially when you have not protested against the layoff.

Did your employer have the right to lay you off?

Most employees believe incorrectly that their employer can place them on temporary leave. Generally, employers are not permitted to do so absent a specific term in the employment agreement permitting them to lay off employees. If your employer laid you off, in the vast majority of cases, this would change a fundamental term of your employment. As such, you have been terminated and you are due severance and termination pay.

The question of whether the IDEL protects employers from constructive dismissal claims is making its way through the courts. The decisions in Coutinho v Ocular Health Centre Ltd.,  and Fogelman v IFG state that the IDEL did not restrict an employee’s common law right to treat a temporary layoff as a constructive dismissal and that the IDEL only covered terminations under the ESA. However, in June 2021, Taylor v Hanley Hospitality Inc., (“Taylor”) the court came to the opposite conclusion, concluding that IDEL displaced the common law and, therefore, limited a plaintiff’s common law right to treat a temporary layoff as a constructive dismissal. We understand that Ontario’s Court of Appeal has set aside the Taylor case’s order on other grounds and remitted it back for reconsideration, so there may be better guidance following the decision on this issue. In our experience, many employers are willing to negotiate a severance package, rather than rely on Taylor.

Your actions matter more than you think

As briefly mentioned above, you should also be aware that the longer you wait to dispute a temporary lay off, the larger the risk that you will be considered to have accepted it by acquiescence. For example, for employees who have been laid off since May 2020, their employer has a strong argument that they have accepted the change to the employment relationship and have not been constructively dismissed.

In addition, asserting constructive dismissal as of the date of temporary layoff can cause other issues. The employer may seek to have any wrongful dismissal damages reduced by the amount of benefits, such as CERB, that you may have received during the layoff period. Courts in Ontario have stated that CERB should not be deducted from wrongful dismissal damages, but courts in other jurisdictions have said otherwise.

What you need to do next

We recommend pursuing severance now to avoid the risk that you would be viewed to have accepted the layoff. We advise you consult an employment lawyer immediately.

You must act now if you wish to pursue wrongful dismissal damages. If you wait to act you will likely not get the outcome you want if the limitation period for your claim has expired, or your employer can establish you have accepted the lay off.