Generally, the Employment Standards Act, 2000 (“ESA”) has been interpreted to protect non-unionized employees from “temporary” lay offs unless their employment contract permits such a lay-off. Fundamentally, temporary means less than 13 weeks (within a 20-week period) without pay or 13-35 weeks (within a 52-week period) with pay. If a contract of employment does not allow for such a lay-off, or an employee is laid off for longer than these periods, the employee is likely to be seen as having been constructively dismissed and will be entitled to compensation.
However, at the outset of the Covid-19 pandemic – as discussed in our previous blog posts here and here – the Ontario government introduced the Infectious Disease Emergency Leave (“IDEL”) regulation, which attempted to protect employers against an onslaught of constructive dismissal claims during and after the pandemic. Section 7(1) of the IDEL states that all “temporary” reductions in an employee’s hours and/or wages does not constitute a constructive dismissal. IDEL was deemed to have been effective as of March 1, 2020 and is still currently running.
Throughout 2021, a robust case law battle has developed between employers relying on section 7(1) of the IDEL to defend against constructive dismissal claims, and employees pleading section 8(1) of the ESA to justify those claims. Section 8(1) of the ESA states that civil remedies, like constructive dismissal claims at common law, are not affected by the ESA or its regulations. Therefore, it is now being argued by plaintiffs that section 7(1) of the IDEL, as a subservient regulation to the ESA, should not technically bar a constructive dismissal claim at common law. Thus far, the courts have taken a mixed approach to this argument, and the employment bar is still awaiting guidance from the Court of Appeal for Ontario on the issue.
However, most of the case law war, thus far, has focused on lay offs that were longer than 13 weeks, but shorter than 35 weeks. Additionally, these layoffs almost always began after the March 1, 2020, onset of IDEL. What has not garnered as much attention is what happens when an employer lays off a non-unionized employee for longer than 35 weeks within a 52-week period and the lay off began before the deemed onset of IDEL. In the recent decision of Ristanovic v Corma, 2021 ONSC 3351 [Ristanovic], the Ontario Superior Court of Justice tackled this exact issue and, in doing so, increased the confusion offered by the courts when granting the Plaintiffs’ motion for summary judgement.
The Defendant employer in Ristanovic laid off two long term employees in January and February of 2020 – notably before the onset of IDEL in March of 2020 – and did not recall them until long after the 35-week statutory limitation had expired. In defending their actions, the employer requested that the court imply a force majeure type clause into the employees’ employment contracts due to the financial hardships faced by the Defendant corporation during the Covid-19 pandemic. In dismissing this argument, the court relied on two distinct reasons. First, the layoffs at issue began long before the outset of the pandemic in Ontario. Second, the court emphasized that even if there was some validity to imputing a force majeure clause into an employment contract based on the Covid-19 pandemic, the facts of this case nullified any such argument because the layoffs at issue were longer than 35 weeks within a 52-week period. Thus, imputing such a force majeure clause would violate the ESA.
Ristanovic seemingly muddies the waters further when attempting to make sense of the current case law battle between IDEL and common law constructive dismissal. However, if we can take any clarity from this decision it relates to the timing of the lay off. Employers who may have laid off employees prior to March 1, 2020, run the risk of not being able to rely on IDEL as a defence against said employees’ potential constructive dismissal claims. As the standard two-year limitation period on civil claims is still running from March of 2020, these claims have time to come forward and may be of surprise to some.