Ontario Appellate Court Ruling Leaves Employers Waiting for Determination on Interpretation of COVID-19 Leave Provisions

Employers in Ontario have been waiting for clarification on the interpretation of COVID-19 leave provisions throughout much of the pandemic. Employers had hoped that the Court of Appeal’s decision in Taylor v Hanley Hospitality Inc. would provide clarity on the implications of Employment Standards Act, 2000 infectious disease emergency leave (IDEL) on an employee’s employment status. Instead, the Ontario Court of Appeal declined to comment on the interpretation of the Employment Standards Act, 2000 leave provisions and solely determined that the lower court judge had erred by dismissing the action by way of a Rule 21 motion.

Background

The employee, Candace Taylor, commenced the action against her employer, Hanley Hospitality Inc., after she was laid off on March 27, 2020. Taylor was temporarily laid off until September 2020, and she did not receive payment during this time. Taylor claimed that she was constructively dismissed from her position because Hanley Hospitality continued its operations during her layoff. Specifically, Taylor argued that her layoff was “‘in response to unfavourable economic conditions,’” not because of the COVID-19 pandemic. Hanley Hospitality argued that it temporarily laid off more than fifty employees because of the emergency measures imposed by the government of Ontario in response to COVID-19.

Hanley Hospitality brought a motion to dismiss the action under Rule 21 of the Rules of Civil Procedure arguing that Taylor was on an IDEL and was precluded from pursuing the action due to these leave provisions under the Employment Standards Act (ESA).

The motion judge concluded that the IDEL provisions displaced Taylor’s common law claim for constructive dismissal and held that she was on IDEL for all purposes, was deemed not to be laid off for all purposes, and was not constructively dismissed for all purposes. The motion judge dismissed Taylor’s action.

The Ontario Court of Appeal’s Decision

The Ontario Court of Appeal found that the motion judge should not have ruled on the Rule 21 motion and should not have dismissed Taylor’s claim.

Under Rule 21.01(1)(a), a judge may determine a question of law raised in the pleadings, in advance of trial, to shorten the trial or to save on costs. The court determined that the motion judge erred by accepting the allegations in Hanley Hospitality’s statement of defence as admitted facts, and by taking judicial notice of contested facts advanced by Hanley Hospitality. Specifically, the court held that the motion judge erred by taking judicial notice of Hanley Hospitality’s submissions pertaining to the legislative context surrounding the government’s emergency measures and their impacts on businesses.

Many employers were hoping for a determination as to whether the IDEL provisions would preclude the “[employee]’s common law claim for constructive dismissal during the period of the pandemic.” Unfortunately, by setting aside the decision of the motion court judge and remitting the matter to the Superior Court of Justice for determination, the Ontario Court of Appeal did not provide the clarity employers were hoping for.

Key Takeaways

Beginning in March 2020, many employers throughout the province placed their employees on temporary layoffs. In May 2020, Ontario adopted O. Reg 228/20 to provide relief from the termination and severance provisions of the ESA. Under this regulation, an employee whose hours were temporarily reduced or eliminated for reasons related to COVID-19 was deemed to be on an unpaid leave, instead of constructively dismissed or laid off. Understanding the interplay between these IDEL provisions, the rules on constructive dismissal, and the impact of these provisions on entitlements such as reasonable notice at common law will impact many employers and employees throughout the province. Unfortunately, employers will have to wait a bit longer for a determination on this matter.

Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.

Kathryn J. Bird is a partner in the Toronto office of Ogletree Deakins.

Gloria Ilunga is a 2021 graduate of Osgoode Hall Law School, and she is an articling student in the Toronto office of Ogletree Deakins.