Howard Levitt: Slew of cases answers a key question: Can employers lay off staff with impunity during COVID-19?

Recent cases have answered the questions Canadian employers and employees have been waiting for. Is a layoff or cut in salary during COVID-19 a constructive dismissal or can employers argue force majeure, or frustration as a defence against such claims?

As readers of this column know, I have unequivocally stated from the outset of the pandemic that unless the layoff was a result of an employer’s government-ordered shut down, every employee who was laid off or had their income significantly reduced as result of the pandemic had a good case for constructive dismissal. Any legal argument to the contrary is bunk.

The issue has also been argued in the context of “busted deal” litigation, with companies arguing that the pandemic provided a legal excuse to not proceed with contracts, with employment being only one such contract.

Two recent cases, albeit in commercial contexts and with some factual distinctions, address the issue. Durham Sports Barn Inc. Bankruptcy Proposal, which focused on dealing with relief from tenancies, and Fairstone Financial Holdings v Duo Bank, which dealt with relief from a contract, support the general principle that COVID-19 will not provide parties with a defence to a breach-of-contract claim.

Applied to employment, companies cannot claim immunity from claims for constructive dismissal as a result of COVID-19’s impact on their businesses.

Except if employers are ordered closed by government order. Employees laid off for the duration of a government-ordered closing, say of a casino, will be unable to claim constructive dismissal as a result of layoffs for the duration of that compulsory closure. However, as soon as the government permits the business’s reopening, employees, who are not recalled on the original terms and conditions, will have claims for constructive dismissal.

Many have argued that the emergency leave and layoff provisions in various employment standards legislation permit employers to lay off their employees with impunity. Although confusing to many, most of those statutes, such as Ontario’s Employment Standards Act, provide that those provisions do not affect the common law claims that employees have, such as the right to sue their employers for wrongful dismissal. In short, those statutes provide employers with no defence.

There have also been cases involving employees who chose to attend work rather than to self-isolate during the pandemic. Courts have taken a dim view of this action.

In one case, Namjot Shoker worked for Garda Security Screening Inc. at Toronto Pearson Airport. She had a headache, which she attributed to a sinus issue, and saw a doctor who recommended a COVID-19 test. Feeling better, she returned to work following the test, which turned out to be positive.

Her employer had issued a bulletin, which she claimed to be unaware of, that required self-isolation while waiting for the outcome of any COVID-19 test. The labour arbitrator, Brian Keller, considered the grievor’s conduct a breach of both the employer’s and public health guidelines and demonstrated her lack of concern for the health and safety of others, warranting her dismissal for cause.

A final employment issue concerning COVID-19 is the impact it will have on the number of months of severance pay which employees are awarded by the courts. Is it elongated by the additional difficulty in securing comparable employment?

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https://financialpost.com/executive/careers/howard-levitt-slew-of-cases-answers-a-key-question-can-employers-lay-off-staff-with-impunity-during-covid-19