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IDEL Layoffs – The Employment Law Rollercoaster Continues!

By June 14, 2021February 22nd, 2023Employment Law

The Ontario IDEL rollercoaster continues to throw employers for a loop. But we may be headed towards an upturn.

It’s no secret that COVID-19 hit Ontario’s businesses hard, especially small and solely-owned businesses. If you are a dentist running your own practice, you’ve been experiencing this reality throughout the pandemic. Forced closures and capacity limitations continue to affect how you run your dental office.

In acknowledgment of these difficulties, the Ontario government enacted a new regulation under the Employment Standards Act, 2000 (ESA). This amendment (“the Regulation”) was meant to help with the difficulty of facing a roster of employees that no longer matches patient demand.

The Climb

The Regulation allowed employers to effectively lay off employees without repercussion by deeming them to be automatically on Infectious Disease Emergency Leave (“IDEL”). Employers were elated. Their already struggling businesses would be able to pivot with protection from skyrocketing employee termination costs.

So, if you had to lay off employees due to COVID, those employees would continue to have job protection through the IDEL, and the layoff would not be considered a termination. The Regulation was enacted in May 2020 and extended multiple times, including the most recent extension to September 25, 2021.

The Drop

Though the Ontario government touted this Regulation as the saviour of small and mid-sized businesses, the elation did not last. In May 2021, the Coutinho case threw the IDEL rollercoaster into a steep downward turn. In the Coutinho case, an employer relying on the Regulation to lay off an employee was found guilty of constructive dismissal and ultimately owing termination costs.

Background: a wrongfully terminated employee can sue the employer for damages to compensate them for the wrongful termination. For more information on a wrongful termination or constructive dismissal, please read our other blogs on the topic.

Based on the Coutinho decision, employers all over Ontario were worried that laid-off employees could now take them to court for constructive dismissal. The persisting questions included:

  • What if I can’t recall my laid-off employees yet because of COVID-19?
  • What if I can’t give my employees their usual hours or pay them their regular pay?
  • Could this mean my employee was wrongfully terminated, and I am on the hook for termination costs?

The Turn

Well, take a deep breath because the rollercoaster is taking a sharp left: A newly released case, Taylor v. Hanley Hospitality, has come to the exact opposite decision, completely disagreeing with the reasoning in Coutinho and holding that the Regulation protects ALL employers from layoff suits.

In this case, Ms. Taylor was laid off by Tim Horton’s due to COVID-19. The employee relied on the Coutinho decision to argue that she was constructively dismissed and should receive termination pay. In contrast, Tim Horton’s argued that they should be able to rely on the Regulation allowing them to lay off without repercussions despite not having a contract with her allowing for layoff. Justice Ferguson followed a common-sense approach when making her decision in this case. Specifically, she said,

I agree with Tim Hortons that exceptional situations call for exceptional measures. The Ontario Government recognized the inherent unfairness in subjecting employers to wrongful dismissal claims as a result of the government imposing a state of emergency. If they did not take action, these claims would only serve to make the economic crisis from the pandemic even worse. It is just common sense. The plaintiff’s action is dismissed

What’s Next?

What does this mean for employers? The answer is: there is no clear answer.

Hold tight because this rollercoaster will continue on its unknown trajectory until the Court of Appeal weighs in on this issue. Until then, employers who have laid off employees in reliance on the Regulation remain exposed to liability for constructive dismissal and wrongful termination.

We will keep you posted and provide updates on this matter as they become available! For more details on the history of this IDEL coaster, please read our previous articles about how the IDEL regulation impacts your dental practice:

If you want more information on the IDEL regulations or any other employment issues, please don’t hesitate to contact us. DMC is dedicated to helping dentists understand and minimize the risks associated with being an employer. Send DMC an email or give our Employment Law Team a call directly at 416-443-9280 extension 206.

The Content of this post is provided for informational purposes only. It is not intended to be legal, financial, tax, or other professional advice of any kind. You are advised to contact DMC (or other counsel) to seek specific legal advice concerning your individual situation.