Seek advice when it comes to COVID-era constructive dismissal

By Tony Poland, LegalMatters Canada •
 Determining what constitutes constructive dismissal in the COVID era has been difficult, and with a limited window to file a claim, it is essential for potential plaintiffs to seek legal advice, says Toronto employment lawyer Ellen Low.

“Most people I am dealing with have started some kind of action with respect to whether they were constructively dismissed at the time that they were put on temporary layoff,” says Low, principal of Ellen Low & Co. “I would caution anybody in that situation who hasn’t sought advice to seek counsel as soon as possible because eventually, they are going to run into a limitation issue.

“The usual statute of limitations in Ontario is two years,” she tells “I am concerned that people who were put on layoff in the spring of 2020 and have not yet decided how to proceed will soon be deemed to be out of time to file a lawsuit against their employer.”

Government introduced new regulations

At the beginning of the pandemic, the Ontario government amended the Employment Standards Act, 2000 (ESA) to include Infectious Disease Emergency Leave (IDEL).

The regulation provided employers with relief ‎from notice of termination and severance provisions of the Act.‎

Non-unionized workers whose hours were reduced or eliminated because of the coronavirus were deemed to be on job-protected unpaid leave. This meant they were not on a temporary layoff, which has established time limits, and therefore not considered to be constructively dismissed. However, those deeming provisions expired in July, so ESA time limits are back in effect if employers lay workers off.

“As of July 31, the temporary layoff clock gets reset,” says Low. “That effectively means if there’s a layoff of anything longer than 35 weeks in a 52-week period as long as benefits are maintained,  or 13 weeks without, the regular ESA rules regarding termination and constructive dismissal come into play and an employee can seek severance.”

Even when IDEL was in place, the question of whether layoffs during the pandemic amounted to constructive dismissal is up for debate, she says.

‘It is an extremely complicated area of the law right now’

“It is an extremely complicated area of the law right now,” says Low. “There is no definitive court decision as to whether IDEL and the modifications to the Employment Standards Act allow for IDEL to modify a common-law right to sue for constructive dismissal. There continues to be a great deal of uncertainty.”

She says the employment bar has also had to deal with conflicting judgments during the pandemic.

“We had one decision that deemed that a layoff related to COVID was a constructive dismissal at common law and that a common-law claim was not displaced by the modified regulation conditions,” says Low. “But soon after we had another ruling that held amendments to the ESA didn’t displace those common-law rights.” 

It also didn’t help that for a long period, courts were essentially closed during COVID lockdowns, she says.

“Courts reopened and they are doing the best they can, but there is still a significant backlog,” says Low. “And we are getting rulings out of different jurisdictions that are contradictory. Decisions are also coming in dribs and drabs. Subsequently, there is an enormous amount of fundamental case law up for debate with no real clear answers.

 “I believe we will be dealing with this uncertainty for quite some time.”

Issue is complicated by shortage of answers

Low says the shortage of answers “makes it difficult to settle anything.”

“Backlogged courts further complicate the issue. It means we have to do what we can to resolve cases amongst ourselves. If not, you could be facing a substantial delay in trying to get in front of a judge,” she says. 

The many contradictory decisions cause problems, Low says.

“In mediations, for example, we are having to deal with questions about how the Canada Emergency Response Benefit (CERB) affects termination and severance payments,” she says. “In the normal course, you cannot get employment insurance while collecting termination and severance pay from your employer. That creates an overpayment. With the differing court rulings, it is very unclear about whether that applies to CERB.”

While it appears the worst of the pandemic is behind us, Low predicts COVID-related litigation will continue well into the future.

“Because the state of the law is still so unsettled and still so confusing, it can be difficult to understand your rights and obligations,” she says. “Whether you are an employer or an employee, seeking legal advice has never been more important.

“Employers can reasonably expect to be getting more and more questions about termination and severance entitlements from employees who have been on lay off,” Low adds. “And as an employee who has been laid off, you need to explore your options to see if there are exceptions to the regulations that entitle you to seek a settlement.”

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