Misguided ruling on IDEL muddies the judicial waters

Employment/Labour /
Stephen J. Moreau
Latest posts by Stephen J. Moreau (see all)

Months after two Superior Court of Justice decisions made it crystal clear that those temporarily laid off because of the COVID pandemic can bring a claim for constructive dismissal, a Superior Court judge has muddied the waters with an ill-reasoned decision stating otherwise.

In Taylor v. Hanley Hospitality Inc., the plaintiff had been temporarily laid off from her job at Tim Hortons on March 27, 2020, 10 days after the Ontario government declared a state of emergency due to the COVID‑19 outbreak. The company argued that it was left with no choice but to temporarily lay off more than 50 employees, including Taylor, “because the state of emergency limited the manner in which they could do business.” 

Taylor claimed the layoff was a termination and brought a claim for constructive dismissal under the common law. She no doubt expected, consistent with two earlier decisions in Ristanovic v Corma Inc. and Coutinho v. Ocular Health Centre Ltd., that her claim would be successful.

However, Justice Ferguson sided with Tim Hortons, holding that a statutory provision and the Infectious Disease Emergency Leave, O Reg 228/20 (IDEL) regulations enacted by the Ontario government in May 2020 which outline some COVID-induced temporary layoff rules, also result in a conclusion that such a layoff “will not constitute a constructive dismissal.”

Faulty reasoning behind Taylor

The Taylor decision has sparked a number of summaries and a conclusion that the law is now muddied, which is true. I think readers are better served with a more critical reading of Taylor. I believe Taylor to be wrongful decided, truth be told. The reasoning used to support the no constructive dismissal conclusion is faulty.

In her reasons, Justice Ferguson starts off by correctly noting that legislation can displace the common law. The common law is what gives us the right to bring a constructive dismissal claim.

Her Honour then talks about s. 50.1(1.1) of the Employment Standards Act (ESA) – the section that has given us the “IDEL” concept – and then concludes that this section displaces the common law right to bring a constructive dismissal claim. This is where the reasoning falls apart, as Her Honour takes no time to explain what s. 50.1(1.1) is there for.

Section 50.1(1.1) appears within a part of the ESA that protects employees from termination where the employee cannot work for a variety of what we would regard as socially acceptable reasons: a pregnancy leave, an illness leave, a compassionate care leave, and so on.

ESA protection there for a reason

This part of the ESA gives employees the right to take such a leave and the right to be recalled to work. Section 50.1(1.1) merely adds to the list of protected leaves by adding COVID-19 as a situation where the employee’s absence does not trigger a finding of termination, resignation or frustration.

This point is critical: section 50.1(1.1) is not a section enacted to take away rights. It is there to give employees rights they would not otherwise have. This explains the use of rights-granting language found in the section: “an employee is entitled to a leave of absence ….”

Justice Ferguson’s conclusion that a provision designed to enhance employee rights actually serves to take away their ability to bring an Action at common law is, on that basis alone, seriously open to challenge.

What Her Honour later terms a “common sense” reading of the section is a reading that is not authorized by the words of the section. As anyone familiar with statutory interpretation principles knows, the foundation of such interpretation is the words, albeit read in context and purposively. Her Honour ignores the words and the context too: a rights-granting provision is translated into one that strips the employee of rights.

Right to sue for constructive dismissal not lost

The important thing to keep in mind then, is that any wording that might lead one to conclude that an employee has lost the right to sue for constructive dismissal is not in the legislation. To me, that ends the analysis.

In fairness, Her Honour goes on to observe that the IDEL regulation itself has more express language that she reads as removing the common law right to commence litigation. But again, this is where first principles matters. Had the ESA removed the common law right to sue, that would be one thing. But once the impugned wording is located in a regulation, Justice Ferguson’s assumption that the common law is displaced must be considered in a whole different light.

In short, while the provincial legislature can approve regulations that override common law, the executive branch of the government is subordinate to the legislature and the courts. Ministerial departments cannot enact regulations that override the common law. That’s why there are these wonderful principles of interpretation – all not mentioned by Her Honour – that state that regulations do not override the common law or legislation. If they do, they are ultra vires or beyond their authority.

IDEL does not remove the need for reasonable notice

The IDEL regulations do not remove the common law right to reasonable notice. If it did, as Justice Ferguson seems to believe, it would be ultra vires.

In Coutinho, Ontario Superior Court Justice David Broad wisely noted that while IDEL rules precluded a claim for constructive dismissal for remedies available under the provincial ESA, it had no impact on an employee’s common law rights to treat a layoff as a dismissal.

This decision may be appealed, or Justice Ferguson’s reasoning will be addressed and corrected in future cases dealing with the IDEL regulation.

As Justice Broad wrote in Coutinho v. Ocular Health Centre Ltd., “It is not possible to reconcile the interpretation of the IDEL Regulation urged by Ocular with the section of the statute which unequivocally provides that an employee’s civil remedy against her/his employee shall not be affected by any provision of the Act.”

Coutinho both addresses head-on the reality that the statute itself says nothing about removing common law rights but, in fact, has other provisions that preserve them. Coutinho has a sounder basis in principle than does Taylor.

With Taylor under appeal, I expect the Court of Appeal to conduct a sound and reasoned analysis of the ESA and the IDEL Regulation. The court will also now have the benefit of the newly released Fogelman decision (Fogelman v. IFG, 2021 ONSC 4042), which follows Coutinho and does not mention Taylor. Eventually, the issue should be resolved, but not after more litigation by employees and employers.

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