September 17, 2022

The Expiration of Deemed IDEL: Key Considerations for Ontario Employers

Prepared by: Danielle A. Johnson   |   Date: August 25, 2022.

Ontario’s Infectious Disease Emergency Leave (IDEL) Regulation expired on July 30, 2022 in accordance with the provincial government’s confirming of July 30th as the end of the official ‘COVID-19 period’.

The IDEL Regulation which was filed by the Ontario government under the Employment Standards Act, 2000 (“ESA”) on May 29, 2020, provided that an employee in a non-unionized workplace who, at any time during the “COVID-19 period” did not perform the duties of their position because their work hours were temporarily reduced or eliminated by their employer for reasons related to COVID-19, were deemed to be on Infectious Disease Emergency Leave.  The IDEL Regulation amended layoff and constructive dismissal rules under the ESA, and in most cases, eliminated temporary layoffs and the risk of a constructive dismissal claim under the statute for the defined “COVID-19 period.”

The Ontario court considered whether the IDEL Regulation bars an employee from making a common law constructive dismissal claim, in Coutinho v. Ocular Health Centre, 2021 ONSC 3076(“Coutinho”). In Coutinho, the Superior Court decided that the IDEL Regulation did not remove an employee’s common law right to claim constructive dismissal arising from a layoff during the COVID-19 pandemic. Shortly thereafter in Taylor v. Hanley Hospitality, 2021 ONSC 3135, where the employer brought a motion under Rule 21.01(1)(a) of the Rules of Civil Procedure for the determination of a question of law before trial – whether the employee’s constructive dismissal claim was precluded by the IDEL Regulation? – the Superior Court came to the opposite conclusion. The Court found that the employee had not been constructively dismissed and explicitly stated that “the analysis in Coutinho was wrong in law”.

The Plaintiff appealed this decision inTaylor v. Hanley Hospitality, 2022 ONCA 376 (“Hanley”). In Hanley, the parties asked the Court of Appeal to decide on the issue of whether the IDEL Regulation displaced the employee’s common law right of action for constructive dismissal even if it proved to be inapplicable to the employee’s circumstances. The Court of Appeal’s interpretation would not only benefit the parties but would provide general guidance on these issues for employees, employers and the employment bar. However, the Court of Appeal refrained from dealing with the substantive question and dismissed the Rule 21 motion, remitting the action for determination before another judge in the lower court. This left the question of whether the IDEL Regulation precludes an employee who was laid off during the pandemic from claiming constructive dismissal at common law still ambiguous and unresolved.

Although the Court of Appeal in Hanley did not in fact settle the matter, it appears from the jurisprudence that, for the time being, employees can pursue constructive dismissal claims as a result of being placed on the IDEL but that each case will be decided on its particular facts.  

What should employers do now, given the expiration IDEL Regulation?

Notwithstanding the expiration of the IDEL Regulation, there is still a risk of employees bringing constructive dismissal claims. Where an employee now seeks to challenge having been placed on IDEL, a central issue will be the question of whether the employee objected to the temporary lay-off at the time that it happened or whether they appeared to have accepted this change to the terms of their employment.

As confirmed by the Court of Appeal in McGuinty v. 1845035 Ontario Inc., 2020 ONCA 816 at para. 24, when an employee has been constructively dismissed,

“The employee has an election to make — whether to continue to work, and so accept the single breach/course of conduct, or to treat that breach/conduct as bringing the contract to an end and sue for constructive dismissal. A claim that the employee has condoned a breach or course of conduct is a defence to a claim of constructive dismissal and the burden is on the employer to establish it.”

With the expiration of the IDEL provision, best practices for employers who have relied on the IDEL regulation are as follows:

  • Reinstate employees who were on a temporary layoff under deemed IDEL due to the pandemic.
  • Return workers who have been called back to the same position, duties and salary that they had pre-lay off.
  • Have any employees who are resigning from the company confirm this in writing and update the company records accordingly.
  • Where there may have been changes to the organizational structure and it is not possible to return a worker to the position, duties and salary that they had pre-lay off, identify an alternative job outlining the duties, compensation and how it may differ from their previous role in impactful ways and provide the employee with the option of the alternative role, or a reasonable severance package.
  • Where the employer does not intend to call back a worker, proceed with a without cause termination, and provide the employee with reasonable (working) notice or termination pay.
  • If still facing financial difficulty, choose whether to place employees on a new temporary lay-off in accordance with the ESA for up to 13 weeks (if there is no health benefits coverage) and up to 35 weeks (where there is health benefits coverage).
  • Ensure that all new employment contracts include a temporary layoff clause, to protect the employer from constructive dismissal claims in future when temporary lay-offs may be necessary.

It will be of great interest to employers and employees to see how the Superior Court of Justice will deal with the question of whether the employee’s constructive dismissal claim was precluded by the IDEL Regulation going forward in Hanley now that the Ontario Court of Appeal has remitted the action back to that court. The timeline for this case is unknown at present.