Constructive dismissal occurs when an employee has made the decision to leave their employment because their employer has unilaterally made fundamental changes to the terms and conditions of the employment relationship. Some examples of said changes include; reducing hours, lowering an employee’s wages or making significant changes to their duties.
To be considered a constructive dismissal, the changes made to the terms and conditions of the employment relationship must be significant changes, which go to the heart of the employment contract. Minor changes will not be a consideration as an employer is often allowed to change the duties and responsibilities of an employee. A finding of constructive dismissal is fact-specific and each case must be determined by examining the employer and employee relationship.
- Is a temporary layoff a constructive dismissal?
- Can a temporary layoff result in a constructive dismissal claim?
- Frustration of the contact
Is a temporary layoff a constructive dismissal?
The economic impact of COVID-19 has forced many employers in Ontario to temporarily layoff their employees.
A temporary layoff generally allows an employer to layoff employees without triggering the repercussions of a “termination”. However, a temporary layoff without the express or implied consent of the employee may amount to a constructive dismissal.
In Ontario under the Employment Standards Act, 2000, a temporary layoff is a period of not more than 13 weeks in any period of 20 consecutive weeks. Employers can lengthen the layoff beyond 13 weeks but it has to be less than 35 weeks in any period of 52 weeks and certain conditions must be met.
Can a temporary layoff result in a constructive dismissal claim?
Generally, an employee’s rights surrounding a temporary layoff during the COVID-19 pandemic are no different than a layoff under normal circumstances. Accordingly, if the layoff is not permitted in the employment contract or employment policies and the employee has not agreed to being temporarily laid off, then an employer does not have an automatic right to temporarily lay off an employee. In which case, a layoff may be considered a fundamental change to the terms of employment and the employee might have the right to treat the significant change as constructive dismissal.
We are currently navigating through unprecedented times and the law does not explicitly address situations that COVID-19 may pose for employers and employees when considering temporary layoffs.
How our courts will treat this unprecedented situation in the future remains to be seen.
There is a chance that the courts may not consider an economically required layoff during this pandemic a constructive dismissal. On the other hand, there is equally a chance that the courts may consider a layoff during this pandemic as constructive dismissal.
Frustration of the contact
Additionally, if the pandemic has caused the closure of a business, the employment contract may be frustrated and incapable of being performed. In this case, both the employer and employee are discharged from the employment contract without having to provide notice or pay in lieu of notice
There is a chance that the current pandemic has “frustrated” the employment contract because the effects of COVID-19 has radically transformed the dynamic of the employer and work of the employee, then what was first contemplated.
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We invite you to contact our Toronto employment lawyers for a consultation to discuss the facts of your employment matter.
