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A Further Update on COVID-19 – Court of Appeal Remits to Trial the Issue of Whether IDEL is a Constructive Dismissal at Common Law – May 19, 2022

May 19, 2022
by Israel Foulon LLP


In our June 10, 2021 E- Bulletin, we summarized Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135 (“Taylor”), where a Motion Judge held that when an employee is placed on Infectious Disease Emergency Leave (“IDEL”) in accordance with Ont. Reg. 228/20 (“the Regulation”) under the Employment Standards Act, 2000 (“the ESA”), they cannot claim constructive dismissal under the common law or the ESA. Taylor directly contradicted the findings in Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 (“Coutinho”), which we previously discussed in our May 10, 2021 E- Bulletin. Subsequent to Taylor, the Court in Fogelman v. IFG, 2021 ONSC 4042 (“Fogelman”), concluded that the Regulation did not prohibit an employee from advancing a constructive dismissal claim in the Courts. We summarized Fogelman in our June 30, 2021 E-Bulletin.

Taylor was appealed by the plaintiff, and the Court of Appeal recently released its decision on the matter after hearing arguments in April of 2022. Unfortunately, the Court of Appeal’s recent decision in Taylor v. Hanley Hospitality Inc., 2022 ONCA 376 (the “Taylor Appeal”) did not resolve the question of whether the Regulation precludes an employee from making a claim of constructive dismissal before the Courts. The Court of Appeal remitted the question back to the Superior Court of Justice for determination, indicating that such a question could not be decided without reference to a full evidentiary record.

Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135: The Facts

On March 27, 2020, Candace Taylor (“Taylor”) was placed on a temporary layoff from her employment with Hanley Hospitality Inc., operating as Tim Hortons (“Tim Hortons”). Taylor was re-called to work effective September 3, 2020 and thereafter maintained her employment with Tim Hortons. Taylor claimed, prior to her recall, that the temporary layoff had resulted in a constructive dismissal at common law. She filed a Statement of Claim alleging that the Regulation did not displace her ability to claim constructive dismissal at common law, but only under the ESA.

Tim Hortons brought a Rule 21 motion to strike the action for failure to disclose a reasonable cause of action. By way of background, Rule 21.01(1)(a) of the Rules of Civil Procedure (the “Rules”) allows a motion “for the determination…of a question of law raised by a pleading…where the determination of the question may dispose of all or part of the action, substantially shorten the trial or result in a substantial saving of costs.”

At the hearing of the motion, the Court was asked to consider the question of law of whether the Regulation displaced Taylor’s ability to claim constructive dismissal at common law. The Court ruled in favour of Tim Hortons, thereby dismissing the employee’s action. In doing so, the motion judge took judicial notice of the significant impact of COVID-19 on businesses and employees across the province.

Ont. Reg. 228/20 and Infectious Disease Emergency Leave – A Refresher

In December of 2021, the provincial government amended the Regulation extending the COVID-19 Period, previously scheduled to end on January 1, 2022, until July 30, 2022, which we covered in our December 8, 2021 E-Bulletin.

The Regulation addresses temporary changes to the employment relationship that have occurred as a result of COVID-19 and alters the temporary layoff and constructive dismissal provisions under the ESA. During the COVID-19 Period (which is retroactive to March 1, 2020):

  • Where an employer is forced to temporarily reduce or eliminate an employee’s hours of work or wages, the employee is deemed to be on IDEL, a job-protected leave, and is not considered to be on a temporary layoff under the ESA; and
  • Temporary reductions in wages or hours worked, for reasons related to COVID-19, are deemed not to be a constructive dismissal under the ESA.

The Court’s Findings

The Court of Appeal granted the employee’s appeal, and set aside the motion judge’s order on the basis that Taylor was not a proper case for a Rule 21 motion. The Court of Appeal noted at paragraph 42:

…Given how intertwined the statutory interpretation issues were with the factual issues, the respondent’s rule 21 motion could not serve its stated purposes of disposing of all or part of the action, substantially shortening the trial or resulting in a substantial saving of costs. The motion judge erred in not dismissing the respondent’s rule 21 motion and further erred in dismissing the appellant’s action on the basis of an interpretation of the statutory and regulatory scheme that she should not have undertaken.

The Court of Appeal found that the motion judge’s analysis was flawed because of technical errors in applying the Rules. The motion judge had failed to assume all of the plaintiff’s allegations from her Statement of Claim were true, which is required in any Rule 21 motion. As well, the motion judge incorrectly accepted the defendant employer’s statements from its Statement of Defence as true on the basis that the plaintiff had not delivered a Reply pleading—this was incorrect, as Rule 25, which governs Reply pleadings, directs that the plaintiff’s failure to deliver a Reply is a deemed denial of the allegations from the Statement of Defence, whereas the motion judge instead accepted the defendant’s disputed statements and positions.

The Court of Appeal also found that the motion judge had erred in taking judicial notice of the facts she accepted in the Taylor reasons at paragraph 4. The Court clarified the high threshold for facts to be accepted by way of judicial notice. The threshold requires that the proposed facts are “so notorious or uncontroversial that evidence of their existence is unnecessary,” and it does not permit judicial notice of “controversial evidence to the prejudice of the opposing party without providing a proper opportunity for its truth to be tested.” The motion judge had erroneously taken judicial notice of the legislative context, intention and impact of the Regulation, which were all disputed facts which worked to the prejudice of the employee.

The Court of Appeal found that the motion judge had erred in her statutory interpretation of the ESA and the Regulation. It held that in the circumstances of Taylor, the interpretive question of whether IDEL displaced an employee’s ability to sue for constructive dismissal at common law could not be answered without evidence. The Court of Appeal found that the motion judge’s reasons in Taylor were “tainted by [her] analytical errors” as described above.

Both the employee and the employer requested a clarifying interpretation of the ESA and the Regulation at the Taylor Appeal, but the Court of Appeal refused to delve into an interpretive exercise. The Court of Appeal stated that the parties had not sought the remedy of the declarative interpretation in their pleadings, and, at any rate, there was neither an evidentiary record nor substantive submissions that “would permit… a proper analysis.”

In the result, the Taylor Appeal overturned Taylor, and the Court of Appeal remitted the matter to the Superior Court of Justice for determination “on a proper record.” The Court of Appeal noted that submissions from the Attorney General of Ontario might benefit the determination of this issue, and noted that Taylor is “a fact-driven case” and that the question of the employee’s ability to claim constructive and the application of the Regulation “are issues very much in dispute.”

Take Away for Employers

The Taylor Appeal address only the Taylor decision; as a result, the substantive question of whether IDEL precludes an employee from a claim of constructive dismissal at common law remains unresolved. In other words, the question remains a live issue which will not likely be fully resolved until the Court of Appeal decides the issue.

Taylor continues to be at odds with Coutinho and Fogelman, and while the Taylor Appeal set aside the order from Taylor, this was done on the basis of the motions judge’s misapplication of the Rules and the judicial notice doctrine, and not because of the substantive findings in Taylor. This means that uncertainty in this area of the law will continue until some next definitive statement on this issue. To the best of our knowledge, neither Coutinho nor Fogelman are being appealed, with the net result that Ontario now has two decisions that support the employee’s right to claim constructive dismissal at common law due to being placed on IDEL. Unfortunately for employers, with the Taylor decision voided (albeit not on the merits), we expect that employee’s will be emboldened to press forward with constructive dismissal litigation due to being placed on IDEL

Key in the reasons from the Taylor Appeal is the Court of Appeal’s emphasis that the determination of this issue is fact-specific as opposed to a standalone academic exercise. The Court of Appeal’s clear language that the application of the Regulation and the employee’s ability to claim constructive dismissal “are issues very much in dispute” indicates that the determination of such issues in most cases are likely to be highly specific determinations based on the particular facts of the parties in question.   Therefore, while employee counsel can be expected to rely on Coutinho and Fogelman to advance claims of constructive dismissal for employees on IDEL, employers will have some basis to assert that the generalized principles of Coutinho and Fogelman would need to be tested against the particular facts of each case in order to ensure they are applicable.

We recommend you contact a member of our team in order to determine the best course of action for your workplace if you still have employees on IDEL or if confronted with threatened litigation on this issue.

Reminder: Deadline to Implement Disconnecting From Work Policy is June 2, 2022

In our March 17, 2022 E-Bulletin, we provided an update on the details of what employers can choose to include in their disconnecting from work policy (the “Policy”). As a reminder, any employer with twenty-five (25) or more employees is required to create and implement such a Policy by June 2, 2022. If you have not yet created or implemented such a Policy, we recommend that you contact a member of our team for assistance.  

Israel Foulon Wong’s Response to COVID-19

Israel Foulon Wong is assessing the situation as it evolves, and is taking all necessary precautions within its workplace. To slow the spread of COVID-19 and for the health of our team and clients, we continue to work remotely where possible. However, please be aware that our offices remain open and are fully functioning. In the circumstances, we encourage our clients to contact us by phone and email to the extent possible. Voicemail messages left at our office phone numbers are immediately forwarded via email. All messages will be promptly responded to. We remain steadfast in our commitment to our clients and would be more than happy to assist you with concerns regarding COVID-19 or any other employment or labour matters.

Legal Disclaimer

This article is for informational purposes only and is not intended to provide legal advice, which in all circumstances must be tailored to the specific facts of any problem. You should obtain a proper legal consultation in order to determine how this article applies to your specific situation. Please feel free to contact Israel Foulon LLP to learn more at 416-640-1550.