Rules on temporary layoff and constructive dismissal due to the COVID-19 pandemic

Rules on temporary layoff and constructive dismissal due to the COVID-19 pandemic

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Rules on temporary layoff and constructive dismissal due to the COVID-19 pandemic

What is constructive Dismissal?

The phrase “constructive dismissal” refers to a situation where, while an employer has not expressly terminated an employee, the employee alleges that the employer’s actions amount to a repudiation of his or her employment contract.

It arises when an employer’s conduct evinces an intention to no longer be bound by the employment contract. The Canadian courts have taken a flexible approach in determining whether an employer’s conduct evinced an intention to no longer be bound by the contract: Potter. Court have identified 2 approaches
– In the first, the court identifies an express or implied term that has been breached and then determines whether the breach was sufficiently serious to constitute constructive dismissal. – In the second, the court considers whether the employer’s conduct more generally shows that the employer intended not to be bound by the contract. The second approach permits the court to find that an employee has been constructively dismissed without identifying a specific fundamental term of the employment contract that has been breached where the employer’s treatment of the employee makes continued employment intolerable.

An employee who is successful in establishing that a constructive dismissal has occurred would effectively trigger his or her termination entitlements under a contract of employment or, absent a contract with a valid termination provision, at common law.

What is Temporary Lay-off?

Employment Standards Act legislation in Ontario and the Canada Labour Code in Canada, provides employers with the ability to temporarily lay off an employee without triggering a dismissal for purposes of such legislation. Where an employee remains on layoff beyond the maximum permitted duration for a temporary layoff, the layoff will be considered a termination and will trigger the employee’s statutory entitlements to pay in lieu of notice of termination (and, where applicable in Ontario and under the Canada Labour Code, severance pay).

ESA and Canada Labour Code may provide comfort to the employers that they are not running afoul to the legislation. it will, not protect an employer from potential claims of constructive dismissal, except where an employee has an employment contract that specifically confers on the employer a right to temporarily lay off.

At common law, the risk will remain that a laid-off employee may allege that, by having been sent home without pay, their employer has repudiated or fundamentally breached their employment agreement.

Constructive dismissal claim arising from a layoff will also likely depend on: (a) whether any benefits or payments are continued by the employer during the layoff period; (b) the duration of any layoff; and (c) how the need for the layoff is communicated to the employee.

Changes Made by Government:

On May 29, 2020, the Ontario government issued a new Regulation 228/20 intended to adjust termination liability under the Employment Standards Act, 2000 (the ESA) in response to the realities of the COVID-19 pandemic.

According to this new issued Regulation 228/20 certain changes to employees’ hours of work and wages not to be a “constructive dismissal” and effectively extends the expiration of temporary layoffs that were undertaken due to Covid-19, by considering certain employee to be infectious disease emergency leave.

Affect on employee: Government modified certain conditions that would otherwise trigger statutory termination and severance payments to employees who would have finished their period of temporary layoff in coming weeks. Government intention seems to be support the business to carryon their business without being impacted by legal implications arises due to Covid-19. These temporary rules apply retroactively to March 1, 2020 and will expire six weeks after the declared emergency ends and do not apply to employees represented by a trade union.

Ministry of Labour complaints deemed not to have been filed

The Regulation also provides that complaints filed with the Ministry of Labor that a temporary reduction or elimination of an employee’s hours of work or a temporary reduction in an employee’s wages (each, a “Change”) constitutes the termination or severance of the employee’s employment are deemed not to have been filed if the Change occurred during the COVID-19 Period for reasons related to COVID-19, with some exceptions.

Options Available to Employees.

-EI benefits and other federal supports Employees who take infectious disease emergency leave may be entitled to employment insurance benefits or to other federal government financial supports. For information, visit the federal government’s COVID-19 Economic Response Plan website or contact Service Canada’s Employment Insurance Automated Telephone Information Service at 1-800-206-7218.

Access to judge-made Common Law Remedies New Regulation 228/20 impact is confined to claims for termination or severance benefits under the ESA. Section 8 of the ESA states that the “no civil remedy of an employee against his or her employer is affected by this Act.” Hence a dismissed employee can go to court to seek a higher level of common law damages for wrongful dismissal than is provided under the ESA.

Although statutory provision can override the Common Law provision but current regulation is not clear if it will override the Common law.

Damages for Breach of Contract: Another remedy available to employee under common law is claim for Standard breach of contract damages. Which is the ability to continue to work and sue for the wages they would have earned had the employer complied with their agreement. This remedy is independent of constructive dismissal and is not impacted by regulation 228/20.

If you considered your self to be constructively dismissed, members of Minhas Lawyers employment group can help you to navigate through these times.

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