Court decisions cause more confusion when it comes to layoffs

By Tony Poland, LegalMatters Staff • Recent contradictory court judgments did little to alleviate the confusion surrounding temporary layoffs during the coronavirus pandemic, leaving some employers and employees “in limbo,” says Toronto employment lawyer Ellen Low.

In Fogelman v. IFG, released on June 2, the Ontario Superior Court ruled in favour of a man who was placed on a temporary layoff in March 2020 due to the COVID-19 lockdowns. The court found that there was no contractual term that allowed it.

A few days later, a second Superior Court judge came to a different conclusion in Taylor v. Hanley Hospitality Inc., ruling an employer is entitled to lay off workers under the Ontario government’s Infectious Disease Emergency Leave (IDEL).

Analysis was ‘wrong in law’

The judge went on to say that the analysis in Coutinho v. Ocular Health Centre Ltd, an earlier ruling that found IDEL provisions did not restrict a worker’s common law right to treat a temporary layoff as a constructive dismissal, was “wrong in law.”

“The Ontario Government recognized the inherent unfairness in subjecting employers to wrongful dismissal claims as a result of the government imposing a state of emergency,” Justice J.E. Ferguson wrote in her judgment. “If they did not take action, these claims would only serve to make the economic crisis from the pandemic even worse. It is just common sense.”

Low, principal of Ellen Low Employment Law, says the layoffs that followed pandemic lockdowns “sparked the debate” and eventually led to a number of court judgments. She says she doesn’t expect the uncertainty to abate any time soon.

“We are going to have a situation where nobody knows for sure how a case will play out because we have different judgments coming to different conclusions,” Low tells LegalMattersCanada.ca. “Employees and employers are left scratching their heads. The Ontario government could try to clarify its intention again with respect to the regulation. But they may also just leave it for the court of appeal.

Direction needed from courts or government

“Until we get some decision or some direction from the appeals court or the government, we are in limbo.”

Prior to the pandemic, layoffs were uncommon, explains Low.

“Under common law, there is no such thing as a temporary layoff unless it is provided for in an enforceable employment contract and that was rare. As soon as COVID hit, there were all sorts of questions about whether a worker could be put on layoff and if they had to accept it,” she says. “Absent that contractual right to put someone on layoff, it had otherwise been unheard of in industries aside from construction, where layoff and recall is a pretty normal thing.

Low says the IDEL was intended to provide some guidance during the economic lockdown; however, the amendment to the Employment Standards Act, 2000, is set to expire in two months.

Now with conflicting judgments, the question of whether a laid-off worker has the right to seek a common law notice period due to constructive dismissal remains unclear, she says.

“I can argue my client is entitled to reasonable notice because the contract has ended as a result of the employer’s conduct,” Low says. “The employer’s counsel can refuse to deal with the employee because they believe the legislation is interpreted in such a way that allows layoffs.

‘The court decisions are so diametrically opposed’

“As a result, there’s no quick settlements because the court decisions are so diametrically opposed. We are going to have to keep duking it out between the different sides of the employment law bar to try and come up with something that’s reasonable.”

She says employment lawyers may have to wait for the court of appeal to sort out the confusion and that could take a while.

Low says it is a “challenging time” with employers and employers caught in the middle.

“There’s really no quick answer. Employees who have been on temporary layoff at any point in the past year and find themselves fired or not reinstated should obtain legal advice,” she says. “Alternatively, if you are an employer, you are going to want to get some guidance about whether there is a contractual right to lay a worker off. Otherwise, you are at risk of being sued for wrongful dismissal. There are two sides to the coin as we have learned and in either case, you need to know your rights and obligations.”


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