Layoffs During The Covid-19 Period Can Be A Constructive Dismissal At Common Law

A Constructive Dismissal At Common Law

In a recent decision of Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076, the Ontario Superior Court ruled that the Infectious Disease Emergency Leave Regulation (“IDEL Regulation”) made under the Employment Standards Act, 2000 (“ESA”) does not preclude an employee from claiming constructive dismissal at common law.


The Plaintiff Jessica Coutinho (“Ms. Coutinho”) worked at the Defendant’s (“Ocular”) eye clinic in Cambridge as an office manager. The principals of Ocular got into disputes with ophthalmologists at the Cambridge clinic over corporate and business issues. The disputes culminated in an incident where one of the Ocular principals changed the locks to the premise on April 30, 2020.

On May 1, 2020, Ms. Coutinho was denied entry when she attended for work. She was told to return to her home and that she would continue to get paid. On May 29, 2020, Ocular wrote to Ms. Coutinho, advising her that the Cambridge clinic would be closed and she was being placed on a temporary layoff. On June 1, 2020, Ms. Coutinho brought action against Ocular seeking damages for constructive dismissal.


Ocular pleaded that pursuant to the section 7 of the IDEL regulation under the ESA, Ms. Coutinho was not constructively dismissed because the temporary elimination of her employment duties and work hours was due to the Covid-19 health crisis. However, Ms. Coutinho takes the position that the IDEL Regulation does not affect her common law right to pursue a civil claim against Ocular for constructive dismissal.

The Court sided with Ms. Coutinho. In the analysis, the Court noted that the scope of s.7 of the IDEL regulation is constrained by s. 8(1) of the ESA, which reads “no civil remedy of an employee against his or her employer is affected by this Act”. The Court also considered the online publication of the Ontario Ministry of Labour, Training and Skills Development, which stated that the rules under the IDEL regulation affect only what constitutes a constructive dismissal under the ESA, not at common law.


Therefore, the Court ruled that the written notice by Ocular to Ms. Coutinho on May 29, 2020 that she was being placed on a temporary layoff constituted a constructive dismissal and Ms. Coutinho was not barred by the IDEL Regulation from bringing a constructive dismissal action at common law. As Ms. Coutinho fully mitigated her common law damages by commencing employment with another eye clinic on July 22, 2020, the Court awarded her statutory termination entitlements under the ESA.


The Court ruled in this case that employees are entitled to treat employers’ unilateral imposition of the layoff as bring the contract of employment to an end at common law and thus have the right to sue for constructive dismissal. It is advisable for employers to seek legal opinions before putting their employees on a temporary layoff or reduce their working hours and/or pay. It also applies to employees, who should consult an employment lawyer about their legal rights once they are laid off

If you are experiencing any employment law issues in regard to your layoff, Top Toronto employment lawyer, Stacey Ball can help you determine your legal options. Please call us at 416-921-7997, extension 227.

For help in all matters of employment law in Toronto call us today.

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