Much attention has recently been given to the Ontario Superior Court of Justice decision in Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 (“Coutinho”). The reason for this is simple; Coutinho is the first court judgment in Ontario to address how Infectious Disease Emergency Leave (“IDEL”), introduced by the Ford government in May 2020, affects traditional employee rights.
IDEL allows employers to put workers off on an unpaid leave for periods substantially longer than what is ordinarily permitted by the Employment Standards Act, 2000 (“ESA”). Yet, going into the pandemic, it was a well accepted legal principle that, absent a specific contractual agreement with their employees, employers could not unilaterally force staff off work without pay (even when otherwise allowed by the ESA). If this happened regardless, affected employees would be within their rights to sue for constructive dismissal. The leading Court of Appeal decision put it this way:
At common law, an employer has no right to lay off an employee. Absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment, and would be a constructive dismissal.
This then setup somewhat of a clash. Would the introduction of IDEL, and the impact of a global pandemic more generally, cause courts to reconsider their traditional ban on non-contracted, and unpaid, temporary layoffs? Unfortunately, the Coutinho decision does not fully answer this question.
Coutinho involved an employee put off work in May 2020, ostensibly due to the impact of COVID-19. The worker in turn sued her employer and alleged it lacked a contractual right to place her on an unpaid layoff. She sought $200,000.00 in damages for constructive dismissal. Her employer responded by arguing that, as it had placed Coutinho on IDEL in response to the pandemic, she was barred from advancing any claim for constructive dismissal.
Ultimately, the Court in Coutinho sided with the employee (albeit limiting her damages to six weeks of statutory termination pay due to the speed by which she found new work, subject to a future hearing regarding a separate allegation of just cause for dismissal). Justice Broad held that that the existence of IDEL does not impact traditional rights which protect against major, non-contracted, changes to employment. In this regard, the outcome in Coutinho is entirely unsurprising. Essentially, Justice Broad concluded that one portion of the ESA (in this case IDEL) does not override other portions of the same statute (namely, ss. 5(2) (greater right or benefit) and 8(1) (civil remedies)). This is a sensible conclusion and one well supported by existing case law. If IDEL was intended to displace traditional common law protections, the Coutinho decision confirms that the Ontario legislature would have needed to employ clearer language to achieve such a result.
What is disappointing about Coutinho, however, is that it represents somewhat of a missed opportunity. Justice Broad only examined a very narrow question – whether the existence of IDEL automatically overrides existing common law protections. What he did not address, and the parties seemingly did not argue, was whether the common law itself should be adapted to afford employers greater flexibility amid a global pandemic.
In a discussion paper presented to the CCLA Litigation Conference in November 2020, I identified several methods by which courts could potentially revise (or adapt) existing rules concerning unpaid layoffs to respond to the COVID-19 pandemic. Sadly, these arguments were not directly addressed in the Coutinho decision, and therefore remain to be considered another day.
Finally, it should be noted that Coutinho may be open to challenge on appeal. At least one potential ground of appeal stems from the court’s finding that statutory termination pay is owed (dependent only on the outcome of a future hearing to address the employer’s just cause allegations).
Justice Broad specifically declined (at para. 35) to decide whether Coutinho’s layoff was conducted in response to the pandemic (a fact that was heavily disputed between the parties). Without a clear determination of this issue, it is impossible to know whether Coutinho may properly qualify for statutory termination pay (just cause allegations notwithstanding). Even if IDEL does not bar a common law claim for constructive dismissal, it will nonetheless prevent entitlement to statutory termination pay if properly utilized. Ultimately, though, this point may be moot. It was clear from the evidence that Coutinho was out of work for almost eight weeks (two more than would be required for statutory termination pay). She therefore has an alternate argument for entitlement to nearly eight weeks of pay at common law. Given the difference here is less than two weeks either way, it will be interesting to see whether either party bothers to revisit this small point in a future decision.