Summary Judgment on Pandemic Constructive Dismissal

Over a year ago, the provincial government introduced new emergency leaves for workers sick from COVID-19. This was soon followed by special provisions for termination and severance under the Employment Standards Act, 2000 (ESA), which many people speculated was likely unenforceable and would be deemed constructive dismissal.

Justice Broad of the Ontario Superior Court of Justice recently dismissed a motion for summary judgment on April 16, 2021, in Coutinho v. Ocular Health Centre Ltd., where the defendant unsuccessfully attempted to rely on these special termination provisions. This is likely the first reported decision in Ontario to interpret these regulations.

The plaintiff was employed from 2014 to 2020, when she received a letter that the employer was forced to close the office, as it was necessary to temporarily reduce its workforce. The defendant claimed that she was being placed on a temporary layoff, and that they would do their best to recall her as soon as possible.

Although the plaintiff claimed constructive dismissal, among other claims, the defendant relied on the new emergency leave provisions under O. Reg. 228/20, and plead that the plaintiff unilaterally terminated her employment and was deemed to have resigned. The plaintiff obtained a new job within a few months of this notice.

The defendant moved for summary judgment on the following grounds:

(a) pursuant to O. Reg 228/20: Infectious Disease Emergency Leave under the Employment Standards Act Coutinho was deemed to be on emergency leave and the temporary elimination of her employment duties and work hours did not constitute constructive dismissal;
(b) as [the plaintiff] was not constructively dismissed as she was deemed to be on infectious disease emergency leave, she has no cause of action against Ocular;
(c) furthermore, or in the alternative, [the plaintiff] has fully mitigated any damages that she may have incurred through her prompt re-employment.

Justice Broad summarized the new emergency regulations as requiring the following 5 conditions:

1. The employee is not represented by a trade union;
2. The employee is subject to a temporary reduction or elimination in hours of work and/or wages;
3. It must be the employer that temporarily reduces or eliminates the employees’ hours of work and/or wages;
4. The temporary reduction of elimination of the employees’ hours of work and/or wages must have occurred for reasons related to COVID-19;
5. The above four conditions must occur during the defined COVID-19 period.

However, Justice Broad pointed to s. 8(1) of the ESA, which says that no civil remedy of an employee is affected by the act. He also pointed to the Ministry Guide on the regulation, which indicated that there was no constructive dismissal under the ESA, i.e. not under common law, and explicitly state the same.

The scope of the regulation is necessarily constrained by the enabling legislation, which prevents the interpretation of a regulation in the same way as a statutory provision, making it impossible to reconcile the regulation with the statute. He therefore concluded,

[55] In my view [the plaintiff] was entitled to treat [the employer]’s unilateral imposition of the layoff as bringing the contract of employment to an end and had the immediate right to sue for constructive dismissal.

Because the employee properly mitigated her damages, and did so in the middle of a pandemic, the employer was only liable for the statutory minimum notice under the ESA. The Ontario Court of Appeal clarified in Brake v. PJ-M2R Restaurant Inc. that such entitlements are not affected by mitigation,

[111] Statutory entitlements are not damages. Ms. Brake was entitled to receive her statutory entitlements even if she secured a new full-time job the day after the Appellant terminated her employment. Therefore, the income that Ms. Brake earned during her statutory entitlement period is not subject to deduction as “mitigation income”. In reaching this view, I adopt the reasons of the Divisional Court in Boland v. APV Canada Inc. (2005), 2005 CanLII 3384 (ON SCDC), 250 D.L.R. (4th) 376.

The plaintiff was therefore entitled to termination pay in the sum of $6,103.85. The remaining issues were left for trial, with no further interlocutory motions without leave, with the exception of a motion to transfer the action to Small Claims Court.

This type of motion may be prudent, given the result of the summary judgment motion, which was illustrated in another recent wrongful dismissal case in Perretta v. Rand A Technology Corporation. The plaintiff’s employment was terminated at the onset of the pandemic. Although the action was brought under Simplified Procedure, the damages sought for wrongful dismissal was $32,660.00, which is within the jurisdiction of the Small Claims Court.

Although the claim initially included an additional $20,000 of general, punitive and aggravated damages, these claims were abandoned. Justice Sanfilippo accordingly stated,

[13] Instead of bringing a motion for summary judgment, upon abandoning the amount of her claim in excess of the monetary jurisdiction of the Small Claims Court the Plaintiff ought to have transferred this action to the Small Claims Court: Courts of Justice Act, s. 23(2). The failure to do so exposes the Plaintiff to the cost consequences provided by Rule 57.05.

[14] I considered whether to transfer this action to the Small Claims Court, even without the consent of the parties, in the exercise of the Court’s inherent jurisdiction: Roberts v. 603418 Ontario Inc., 2014 ONSC 6240 (Div. Ct), at para. 25, citing Shoppers Trust Co. v. Mann Taxi Management Ltd. (1993), 1993 CanLII 5487 (ON SC), 16 O.R. (3d) 192 (Gen. Div.); Graves v. Avis Rent a Car System Inc. (1993), 21 C.P.C. (3d) 391 (Gen. Div.). While I do not condone the Plaintiff advancing this claim in the wrong branch of this Court, I decided not to transfer this action to the Small Claims Court at this time as the transfer would only cause delay and add to the costs that the parties have already generated disproportionately to the amounts in issue.

The summary judgment was ultimately decided in the amount of $16,807.52, well within the Small Claims Court decision, meaning the choice to proceed under Simplified Rules may affect any further cost entitlement the plaintiff would be seeking.

The circumstances of the pandemic continue to pose challenges for employers and employees. The former face enormous uncertainty, but employees are also entitled to have some certainty of their entitlements. Commenting on Justice Dickson’s now famous quote about the importance of work in a person’s life in Reference Re Public Service Employee Relations Act (Alta.), Justice Iacobucci stated in Machtinger v. HOJ Industries Ltd.,

…not only is work fundamental to an individual’s identity, but also that the manner in which employment can be terminated is equally important.
[emphasis added]

What should be clear is that the emergency termination provisions are unlikely to be enforceable for the vast majority of employment relationships in Ontario.

At the same time, the enormous backlog of cases created by the pandemic means that courts will invariably apply greater scrutiny and pressure on parties to resolve matters themselves, and to take reasonable positions in litigation. The failure to do so can and should be treated accordingly through costs.

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