CHAUDHRI: Court overturns law on layoffs giving employers new hope

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I recently wrote about a new case — Coutinho v Ocular Health Ltd. — where the plaintiff Ms. Coutinho was found to have been constructively dismissed after she was placed on IDEL, the infectious disease emergency leave enacted in Ontario soon after COVID began.

The Coutinho case was great news for the hundreds of thousands of employees over the past 15 months who have been laid off under the new IDEL legislation. It gave employees the right to assert they were in fact terminated when employers temporarily laid them off since the pandemic began.

For those of you keeping score, IDEL has been extended yet again to Sept. 25, 2021. So, if you have been laid off during the pandemic, your employer may not ring you up until then unless IDEL, once again, gets extended.

The cause for celebration for employees has been cut short, however, as a new case released this week completely disagrees with Coutinho.


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In Taylor v. Hanley Hospitality Inc., Tim Hortons employee Candace Taylor was laid off on March 27, 2020. On Aug. 18, 2020, she received a written notice that she was being recalled to work on Sept. 3, 2020. Taylor believed she was constructively dismissed and sued Tim Hortons.

When the case went to court, Justice Ferguson called out Coutinho as being wrong with respect to the law and sided with Tim Hortons.

The decision recognizes the plight of employers during the pandemic and how lawsuits from employees would make the situation for employers even worse.

The decision stated: “I agree with Tim Hortons that exceptional situations call for exceptional measures.”

The court went on to recognize “the inherent unfairness in subjecting employers to wrongful dismissal claims as a result of the government imposing a state of emergency.”


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  1. Sunira Chaudhri is an employment and labour lawyer and partner at Levitt Sheikh Chaudhri Swann. She sheds light on some questions for employees during COVID-19.

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  2. While few of us can sympathize with Mike Duffy’s lamentations, his complaint isn’t without some merit, writes Sunira Chaudhri.

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  3. Sunira Chaudhri is an employment and labour lawyer and partner at Levitt Sheikh Chaudhri Swann. She sheds light on some questions for employees during COVID-19.

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When it comes to employment cases, the financial circumstances of the employer was never a factor the court generally considered when awarding damages to an employee. This case, if upheld, may reframe the way courts look at terminations; opening the door for employers to argue their own financial circumstances when faced with claims for lost compensation.

What does this mean for employment law? Both the Coutinho and Taylor cases are likely to be appealed, leaving employers and employees in flux a while longer. If the Taylor decision is upheld, employers will remain free to lay off employees at will, with impunity — even if employers aren’t suffering financially from the pandemic.


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For now though, employers can breathe sigh of relief as this case may significantly limit threats of employee litigation in light of this decision.

Employers should consider the following:

Prove layoffs are strictly COVID related: while many layoffs over the last year were a result of the pandemic, some employees allege employers laid them off for other reasons; using COVID as the easy excuse. Given this decision, a court is likely to give greater consideration to employers that can establish that layoffs were a result of the pandemic only and not for interpersonal, performance or other issues.

Recall employees: even though IDEL has been extended to September, employers are much more likely to avoid litigation if employees are recalled to work as quickly as possible. Recalling employees limits their lost income to a fixed amount and greatly reduces the incentive to sue.


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Communicate: If you must lay off employees, communicate how the pandemic has affected your business. Too often, I hear from employees who have been laid off, left in the dark, with no information about what’s next. When possible, share information about your plan to scale up again and bring employees back to work.

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On to your questions from this week:

Q. I work in a meat processing plant and have been laid off during COVID. I was called back to work but now I have been laid off again. I received a call from HR saying that the company bought machines to replace my role and that I would be getting a termination letter offering one week per year of service. Should I accept?

A. Generally, one week per year of service is light (and potentially lower than your minimum entitlements). Before making any decisions, review your termination letter first. Secondly, dig out any employment agreement you may have signed. These are two of the most important documents you will need to get advice. Remember to take stock of all of the perks and benefits you received during your employment (not just salary) when getting advice. You may be entitled to the continuation/payment of bonuses, incentive plans, health benefits, pension and more.


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Q. I work at a furniture wholesaler and was laid off during COVID. I have learned that the owner has not paid the lease and other bills for a long time. No one seems to know where he is. I doubt I will be called back to work at this rate. If I have no job to go back to can I sue for wrongful dismissal damages?

A. In the normal course it sounds like you could have a wrongful dismissal case. I often encourage my clients to take a practical approach to terminations. Do your research. If your company is likely to shut down or wind up in bankruptcy, even if you win in court if your company no longer exists, it could be difficult to collect. If you spend money on legal fees you want to have a good shot at getting a good return on your investment. Of course, get some legal advice to go through the specifics of your case.

Information provided is for general knowledge only and should not be considered legal advice.

Have a workplace issue? Maybe I can help! Email me at and your question may be featured in a future article.


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