InTouch, July 2021

Caitlin Turner, Lawyer

The Temporary Layoff: Does it Even Exist?

If you are anything like me, you have been waiting for months and months for many things, like a vacation somewhere beachy, a celebration of a child’s birthday with a group of sugared-up toddlers, or the purchase of an article of clothing with that “I tried it on before buying” feel. Even more than these wonderful experiences, I have been waiting for a judge to weigh in on the existence of a COVID temporary layoff in the common law world of constructive dismissal. That moment has finally come!

Some context may be helpful in order to understand the suspense that employment lawyers, employees, and employers alike have been enduring for over a year. In the days before COVID-19, a temporary layoff existed only if an employment contract allowed it and only then if the layoff complied with the Employment Standards Act, 2000 (“ESA”). Without a contractual right, a temporary layoff was just a dressed-up constructive termination, presumptively entitling an employee to termination pay.

On May 29, 2020, our provincial government changed the ESA so as to allow an employer to impose a temporary layoff on an employee in the absence of a contractual right, as long as the layoff was related to COVID-19 (the “IDEL regulation”). The IDEL regulation made it clear that an employee laid off due to COVID could not pursue their statutory entitlements to termination pay under the ESA. What was not clear was whether or not that same employee could still sue their employer in court for termination pay under the common law (the law that develops through decisions of judges).

On April 29, 2021, Justice Broad released his decision in Coutinho v. Ocular Health Centre Ltd. Justice Broad concluded that the IDEL regulation did not change the common law and that in imposing a layoff without a contractual right, an employee had been constructively terminated and was presumptively entitled to termination pay under the common law.

This decision has gained a lot of attention and there is no doubt it will embolden many a laid off employee to pursue termination pay. How successful each employee will be in a claim will depend on many factors, including how many other judges follow Justice Broad’s decision and how diligent the laid off employee is in seeking out alternate employment. It is also important to note that Justice Broad’s conclusion may have been very different had Ocular Health Centre Ltd. been forced to close y government order, like many non-essential businesses.

Those fortunate employers with employment contracts that included the right to impose a temporary lay-off likely slept better than those employers without such a right.

With a light at the end of the COVID-19 tunnel finally visible, many people are starting to plan their post-pandemic future. Now might be a good time to plan for your business’ bright future, by updating your employment contracts. We can help with that.