On May 12, 2022, the Ontario Court of Appeal (OCA) released its long-awaited decision in Taylor v. Hanley Hospitality Inc., 2022 ONCA 376 (Hanley (OCA)).   The employee appealed the decision of Ontario’s Superior Court of Justice (SCJ) in Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135 (Hanley (SCJ)), which provided that Ontario Regulation 228/20 (IDEL Regulation) made under the Employment Standards Act, 2000 (ESA) precludes an employee who was laid off during the pandemic from claiming constructive dismissal at common law. 

The IDEL Regulation provides that an employee in a non-unionized workplace who, any time during the “COVID-19 period” does not perform the duties of their position because their work hours are temporarily reduced or eliminated by their employer for reasons related to COVID-19, is deemed to be on Infectious Disease Emergency Leave.  The IDEL Regulation amends layoff and constructive dismissal rules under the ESA, and in most cases, eliminates temporary layoffs and the risk of a constructive dismissal claim under the statute for the defined “COVID-19 period.” The end date of the COVID-19 period has been extended several times, most recently to July 30, 2022. 

The OCA allowed the appeal, set aside the order of the SCJ, and remitted the action for determination before another judge in the SCJ.  As a result, the question whether the IDEL Regulation precludes an employee who was laid off during the pandemic from claiming constructive dismissal at common law was not addressed.

Background

In Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076 (Ocular Health), Ontario’s SCJ decided that the IDEL Regulation did not remove an employee’s common law right to claim constructive dismissal arising from a layoff during the COVID-19 pandemic. Just six weeks after Ocular Health was decided, however, the SCJ came to the opposite conclusion in Hanley (SCJ) as noted above.  (Links to more detailed articles are available here and here.)  Leave to appeal Ocular Health to the Divisional Court was denied in Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 6175.  Thereafter, in Fogelman v. IFG–International Financial Group Ltd., 2021 ONSC 4042 (IFG), another judge in Ontario’s SCJ made the same decision as the judge in Ocular Health.  These decisions left the law in an ambiguous state, with employers hoping that the OCA might resolve the confusion.

In Hanley (SCJ), the employer brought a motion under Rule 21.01(1)(a) of the Rules of Civil Procedure for the determination of a question of law before trial (whether the employee’s constructive dismissal claim was precluded by the IDEL Regulation).  The SCJ decided the Rule 21.01(1)(a) motion was appropriate “as it involves statutory interpretation (and no matters of credibility).”  The SCJ took judicial notice of the fact that the province required the employer to close its storefronts due to the pandemic, and of the fact that emergency measures required some businesses, including the employer, to close temporarily or cut back their operations through no choice of their own.  The SCJ also accepted as uncontested the employer’s allegations in its statement of defence because the employee did not deliver a Reply.  The court found the employee did not resign and was not constructively dismissed, and dismissed the employee’s action. 

OCA Decision

In granting the employee’s appeal, the OCA dismissed the employer’s Rule 21 motion finding that the motion judge failed to apply the correct principles. Specifically, the OCA found that the motion judge erred in:

• Failing to assume that the allegations in the statement of claim were true and treating the allegations in the employer’s statement of defence as admitted facts because the employee did not deliver a Reply; 
• Taking judicial notice of “the litany of judicial facts set out in…her reasons,” including the legislative context and intention behind the government’s emergency measures and their impact, especially as they pertain to the parties to the proceeding, because such facts are not “notorious and uncontroversial” as demonstrated by “the parties’ respective, divergent pleadings.”  The motion judge was not entitled to take judicial notice of such facts because they were not proven by evidence under oath nor tested by cross-examination; and
• Generally tainting her interpretation of the IDEL Regulation with analytical errors and dismissing the employee’s action on the basis of an interpretation of the statutory and regulatory scheme that she should not have undertaken.      

The parties urged the OCA to decide whether the IDEL Regulation displaced the employee’s common law right of action for constructive dismissal even if it proved to be inapplicable to the employee’s circumstances.  They argued that the OCA’s interpretation would be useful to the parties and “provide guidance on these issues for employees and employers in general.”  The court refrained, however, from providing what it described as a “standalone declaration,” which it considered “academic at this stage of these proceedings” because it would be “divorced from any factual foundation…”   The OCA dismissed the Rule 21 motion and remitted the action for determination before another judge in the lower court, leaving the question whether the IDEL Regulation precludes an employee who was laid off during the pandemic from claiming constructive dismissal at common law still ambiguous and unresolved.

Bottom Line for Employers

Given the decision in Hanley (OCA), employers in Ontario do not have the final word on whether the IDEL Regulation precludes an employee who was laid off during the pandemic from claiming constructive dismissal at common law.  It remains to be seen how the SCJ will deal with this question going forward in Hanley now that the OCA has remitted the action to that court. The SCJ’s treatment of the subject in the next Hanley decision, and any other trial decisions rendered before it is released, may add to the debate especially if the Ocular Health and IFG decisions are distinguished.