Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076

Full Decision

Covid-related temporary layoff is Constructive Dismissal, says Ontario Superior Court ruling

In a much-anticipated employment law ruling, the Superior Court has found that employees temporarily laid off because of the COVID pandemic can bring civil action for constructive dismissal.

Justice David Broad found Ontario’s Infectious Disease Emergency Leave Regulation (IDEL) under the Employment Standards Act, which was enacted at the onset of the pandemic, does not take away a laid-off employee’s common-law right to sue for constructive dismissal.

The defendant, Ocular Health, operated an ophthalmic clinic in Cambridge, Ontario at which the plaintiff, Jessica Coutinho, worked as an office manager. In April 2020, a commercial dispute between Ocular’s principals and the doctors who ran the clinic led to the former shutting the clinic down.

Coutinho arrived at work on May 1, 2020, to find the locks changed and was later told the office was closed but that she would still be paid. That arrangement was amended on May 29, when she got a letter from Ocular principal Mark Reinstra informing her that she had been placed on a temporary layoff and would no longer receive a salary.

Coutinho filed a statement of claim June 1, bringing an action against Ocular for constructive dismissal. In its statement of defence, Ocular said it had intended to consolidate operations at its Kitchener clinic and employ those who had worked in Cambridge, but the COVID health crisis had thwarted that plan. It was because of COVID that Coutinho was laid off, said Ocular.

The defendant pled that, according to the IDEL, temporarily reducing or eliminating an employee’s hours of work for reasons related to COVID does not constitute a constructive dismissal. But alternatively, if it were found Coutinho was constructively dismissed, Ocular said it had just cause for termination.

Coutinho pled that nothing in the Employment Standards Act or its regulations takes away her common law right to pursue a civil claim for constructive dismissal.

Ocular moved for a summary judgement. The company argued that, given the severity of COVID’s impact on employees and employers, the IDEL Regulation should be interpreted to apply to both constructive dismissals pursuant to the Employment Standards Act, as well as at common law.

Justice Broad found that the IDEL regulation does not affect Coutinho’s right to pursue a claim for constructive dismissal, and he dismissed Ocular’s motion for summary judgment.

The sole issues for trial, said Justice Broad, were whether Ocular had just cause to terminate Coutinho, and if so, whether the company is then relieved of its obligation to pay her statutory termination pay of $6,103.85 plus interest.

The decision of Taylor and Hanley Hospitality Inc. reached a different conclusion than the Coutinho case, and the plaintiff of Taylor has appealed to the Court of Appeal with a hearing date of April 1, 2022.

However, Justice Broad’s, reasoning was echoed in another Superior Court decision, Fogelman v. IFG, 2021 ONSC 4042 at paragraphs 45-50.

Written by

Rob Konduros has been in practice for 34 years in Cambridge, Ontario and specializes in civil litigation with an emphasis on personal injury‎, disability and employment law.