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Taylor v Hanley Hospitality Inc. and the Common Law Right to Sue

4 minute read

As many employers in Ontario now know, the Ontario government has intervened – again – to extend the Infectious Disease Emergency Leave (“IDEL”) COVID-19 period under the Employment Standards Act, 2000 (“ESA”). As we explained, in an earlier blog post, in response to the pandemic, the provincial government has allowed employers (in certain circumstances) to reduce employee wages and hours due to COVID-19 without triggering a constructive dismissal under the ESA. In effect, this was achieved by deeming certain employees to be on a leave of absence under the ESA (i.e., IDEL), rather than a temporary layoff which would not have been able to last indefinitely. While this provided some security for employers (as it appeared to allow them to reduce hours and wages of employees as business needs dictated), this “COVID-19 period” as it was named under the applicable regulation, was set to end (most recently) on July 3, 2021. In what has become a pattern, the Ontario government intervened in June 2021 to extend the COVID-19 period to September 25, 2021. So, subject to some important exceptions, employers can continue to reduce the hours and pay of their employees without triggering a constructive dismissal, under the ESA, until September 25, 2021.

Even still, as we mentioned in our earlier blog post, it was still an open question as to whether the IDEL allowed an employer to reduce hours and wages without triggering a constructive dismissal under the common law. In other words, while the applicable regulation made it clear that the IDEL removed an employee’s right to pursue a constructive dismissal claim under the ESA, it was not clear whether an employee could, nevertheless, pursue a common law claim, in court, for damages for reasonable notice. In that post, I speculated that the IDEL did not undermine an employee’s right to pursue a constructive dismissal claim in court. My position was buttressed by a recent decision from the Ontario Superior Court which seemed to confirm my initial speculations. Well, it appears that my initial speculations may have been incorrect.

In a case released on June 7, 2021, from the Ontario Superior Court of Justice, Taylor v Hanley Hospitality Inc., 2021 ONSC 3135 (“Taylor”), Justice Ferguson firmly rejected the idea that the IDEL only amended the ESA and not the common law. In other words, Taylor held that an employee could not pursue a common law claim for constructive dismissal if the basis for that claim was that the employee had been placed on the IDEL. Justice Ferguson did not mince words. In the written decision, the court held that it was “just common sense” that employees should not be permitted to pursue a common law wrongful dismissal claim and that “it should be obvious to the world what the legislature’s intention was [by creating the IDEL]”. So, it would seem that I was wrong and the matter has been put to bed. But perhaps that is too hasty.

While employers, and their advocates, will no doubt be happy with the Taylor decision, they still have reason to be cautious. As I mentioned above, previous court decisions came to the opposite conclusion that the court reached in Taylor. There are now conflicting decisions on the very same issue. In the circumstances, it is likely that the Ontario Court of Appeal will need to weigh in on the matter to provide some much needed clarity and guidance. Rather than clearing up the issue, the decision in Taylor has likely only deepened the uncertainty, at least for the time being. Therefore, employers seeking to rely on the decision in Taylor, need to proceed with caution, as it will likely not be the last word on the matter.

Our team at Lerners LLP will be monitoring the situation closely. We are equipped to advise employers and employees about these very important changes to Ontario employment law. If you or your organization have any questions about the Infectious Disease Emergency Leave, or any other employment law issue, we would be happy to assist you.

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George A. Hamzo

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