In Taylor v Hanley Hospitality (2021 ONSC 3135) released June 7, 2021, Ferguson J. ruled that Coutinho v Ocular Health Centre (20121 ONSC 3076) was wrongly decided and thus does not have to be followed. The Plaintiff was put on IDEL leave on March 27, 2020, then recalled and returned to work on September 3, 2020.
In essence the Court found that the ESA provisions displace the common law which says that in most cases a temporary layoff is a termination. Furthermore to rule otherwise would make the ESA amendments irrelevant as it would not protect employers from lawsuits.
Here is part of the Judges’ analysis:
 I agree with the defendant’s submissions regarding this case:
(i) no matter which authority one wants to consider on the point – it offends the rules of statutory interpretation to give an interpretation that renders legislation meaningless. That issue was never addressed in Coutinho;
(ii) Coutinho never addressed the consequential analysis – what does IDEL and the Regulation actually mean if not what Tim Hortons says it means?;
(iii) what we see from the cases is that s. 8(1) simply sets out that the ESA does not set out an exclusive forum for addressing matters set out in the Act. The employee can make a complaint under the Act or seek redress in the courts;
(iv) the courts have never said that the Act does not or cannot displace the common law. In fact, they have said the opposite. The Court of Appeal addressed this in Elsegood4 (relied upon by the plaintiff in this case):
(v) if we paraphrase and apply that reasoning to this case, we get this:
(a) the irony is that Elsegood was a constructive dismissal case;
(b) the court put it succinctly: “Simply put, statutes enacted by the legislature displace the common law”;
(c) in Elsegood, the court addressed the fact that s. 56 provides that a person was terminated “for the purposes of section 54″ of the ESA. The employer was arguing that the employee was not terminated at common law. The court disagreed. The court found that “A s. 56(1) termination is a termination for all purposes”. The court stated that it is a “faulty premise that the common law continues to operate independently of the ESA”.
v) if we paraphrase and apply that reasoning to this case, we get this:
(a) The employee was on a leave of absence (IDEL) for all purposes;
(b) The employee was deemed not to be laid off for all purposes;
(c) The employee was not constructively dismissed for all purposes;
(d) The employee cannot be on a leave of absence for ESA purposes and yet terminated by constructive dismissal for common law purposes. That is an absurd result. That is the same kind of “untenable” result that the employer was seeking in Elsegood.
(vi) in summary, s. 8(1) has never been interpreted to go as far as the court went in Coutinho and the courts have never before held that s. 8(1) prevents the ESA from displacing the common law. The Court of Appeal, which is binding on this court and the court in Coutinho, has said the opposite, in a constructive dismissal case;
(vii) S. 8(1) of the Act merely confirms that the ESA is not the exclusive forum to seek redress for issues involving the Act;
We now have two cases within two months which come to completely opposite conclusions. I am sure that this will be heading to the Court of Appeal soon. Hopefully they will give us a clear and concise answer.
Insofar as this Judge is concerned, an employee could be put on IDEL from March 2020 to July 3, 2021 (17 months) and have no remedy in law.
Presumably to this judge the pre-COVID rules would also displace the common law. This would mean that employers could temporarily layoff any employee for up to 35 weeks. Does the mean that an employee could be recalled from IDEL on July 3, 2021, and then immediately be put on a 35 week temporary layoff, again without any legal recourse? That would mean that employee could be without pay for up to 25 months without any legal recourse.
That would certainly be a very big change in the law.
Does this now mean that instead of terminating an employee, any employer could just issue a temporary layoff notice of 35 weeks? When they issued a recall notice 35 weeks later, many employees would either have started another job or simply did not wish to return to such unstable employment. Furthermore, I am not sure that the ESA allows for the employee to claim that the layoff is a sham (for instance because the employer immediately hires a replacement) and therefore the temporary layoff is a disguised termination. This could easily lead to abusive employer behaviour.
In this particular case, the employer did in fact recall the employee after 5 months. What would be the result if instead of alleging constructive dismissal the Plaintiff claimed breach of contract for non-payment of wages? The law of contract allows the innocent party to either sue on the contract (thus only claiming lost wages) or to repudiate the contract (by claiming constructive dismissal). In this case, the employee’s loss would be limited to the actual loss which was 5 months, so suing for back wages vs claiming constructive dismissal damages would produce the same result. My quick reading of the IDEL rules would only seem to exclude the right to claim constructive dismissal, not wages owing from a breach of contract.
The one thing you can say about employment law in Ontario is that it certainly not getting easier or more predictable.