Constructive dismissal occurs when an employer unilaterally makes a substantial change to the terms of an employment agreement or demonstrates an intention to no longer be bound by the terms of the employment agreement. When this occurs, the employee may treat his or her employment contract as having been terminated by the employer without cause, with corresponding entitlement pursuant to the Employment Standards Act (the “ESA”) and possibly common law principles, depending on the terms of the employment agreement.  

An employer does not have an inherent right to temporarily lay off an employee; an employee must agree to a temporary layoff, either in their employment agreement, which may contain a clause anticipating the potential need for temporary layoffs, or at the time of layoff. If an employee is temporarily laid off and has not agreed to be, he or she may have a claim for constructive dismissal.

In response to the COVID-19 pandemic, the Ontario government enacted O.Reg. 228/20 (the “Regulation”), which impacted certain ESA rules during the COVID-19 period. This regulation has been amended, extending the COVID-19 period to January 2, 2021.

 Section 7(1) of the Regulation states that a temporary reduction or elimination of an employee’s hours of work by the employer for reasons related to the designated infectious disease does not constitute constructive dismissal if it has occurred during the COVID-19 period.

A common law principle  (such as the principle that an employer is not entitled to temporarily lay off employees) can be overridden by statute, however there is a principle of statutory interpretation endorsed by the Supreme Court of Canada that “statutory language must be clear and unambiguous to override the common law.” For the principle disallowing temporary layoffs to be overridden, there would need to be a double override: first over s. 56 of the ESA, which outlines the point at which a temporary layoff is deemed to be termination of employment; and second, over the common law itself. The Regulation does not state that it is intended to override the common law, meaning that if you have not consented to a temporary layoff, you may still have a claim under common law for constructive dismissal if your hours of work have been temporarily reduced or eliminated.

If this regulation had been intended to override the common law or to eliminate potential claims for damages pursuant to a breach of contract, it could have done so at no extra expense. A court reviewing the Regulation would likely find that it cannot have the effect of overriding the common law without explicitly stating an intention to do so. Therefore, employees who want to bring a claim for constructive dismissal under common law may be successful despite the Regulation.

This is a brief outline of constructive dismissal during COVID-19 and does not constitute legal advice. Employment law is a specialized and fact-dependent legal field. If you feel you have been constructively dismissed or have other concerns with regard to employment law, contact the employment department at Barriston Law to consult with a lawyer.

Jacklyn Tuckey and Alexandra Paul