Home Constructive Dismissal COVID-19 layoffs and constructive dismissal: Tatha Swann breaks down recent rulings

COVID-19 layoffs and constructive dismissal: Tatha Swann breaks down recent rulings

by Todd Humber

At HRPA’s Annual HR Law Conference, Tatha Swann, founder of Swann Law in Toronto, provided an insightful session on constructive dismissal viewed through the lens of COVID-19 related layoffs.

“There have been a lot of COVID layoff cases in the last year, finally making their way to a decision to tell us how we can and cannot layoff employees during the next global pandemic,” said Swann. “Hopefully that is not coming soon, but we still can gather some guidance on how the courts will view constructive dismissal in the context of layoffs generally.”

Chalmers v. Airway Transit Service Ltd.

Swann opened her discussion with the case of Chalmers v. Airway Transit Service Ltd., a 2023 ruling by the Ontario Superior Court of Justice. It involved a vice-president who was laid off during the pandemic and never recalled.

That executive watched other employees being recalled and, after a year, he was “fed up and sued for constructive dismissal,” she said.

The VP had no contract that allowed for a temporary layoff, said Swann. He never agreed to the layoff, and when he asked when he would be recalled, he was given no response. Instead the company asked him for his login information, but didn’t recall or terminate him. The court awarded him 25 months’ pay.

“I don’t think anyone is surprised that this was a constructive dismissal,” said Swann. “What is interesting about this case is that the court was so displeased with how he was treated that they awarded him $30,000 in punitive damages.”

The court didn’t believe that the employer intended to call him back and that, instead, they were stringing him along — putting him in an impossible position with no pay and no benefits, she said. They forced him to wait quietly in the wings “for an indeterminate period of time in a very difficult job market relying on limited updates” from the employer.

The takeaways from that ruling, to avoid extra damages on top of constructive dismissal, include regular communications with employees on layoff, she said.

“Even if we don’t know when we’re recalling employees, telling the employee when the next update or checking is coming will be helpful,” said Swann.

Also, it’s a best practice to respond to all inquiries about timing and provide explanations, if possible, about why some employees are being recalled while others are not, she said.

“And lastly, don’t string along employees if the company has no real intention to recall them,” said Swann. “Instead, they should just be given a severance package and allowed to get on with their career.”

Courts do not like to see employers playing games with any workers, and that’s especially true with long-serving employees, she said.

Pham v. Qualified Metal Fabricators Ltd.

Swann then turned her attention to another ruling out of Ontario in 2023 — Pham v. Qualified Metal Fabricators Ltd.

In that case, an employee with 20 years of service who was laid off at the start of COVID-19 waited nine months before taking legal action.

“The company argued at trial that waiting 8 months was too long,” she said. “By not objecting, you’ve accepted the layoff. You’ve condoned these new conditions of your employment.”

The trial court accepted that argument, but the worker appealed — and the Court of Appeal ruled in his favour, finding constructive dismissal had in fact occurred.

There was no employment contract in place that gave the employer the right to temporarily lay him off, said Swann.  He signed a letter acknowledging the layoff, but it just confirmed that he understood the layoff was happening, not that he agreed to it, she said. Regarding the nine-month silence from the worker, the Court “reminded us that employees are permitted a reasonable period of time to assess contractual changes before they have to take legal action.”

In this case, it was a 20-year employee who was faced with a layoff for the first time in his career, in the midst of a global pandemic considering whether he would need to sue his employer and thus give up his 20 year career to try to get a severance package. Certainly he would be entitled to considerable time to consider what to do before making this irrevocable decision.

Van Hee v. Glenmore Inn Holdings Ltd.

Swann also discussed the case of Van Hee v. Glenmore Inn Holdings Ltd., which involved a server with 13 years of service in Alberta who was temporarily laid off three times during the pandemic.

In September 2021, the company implemented a vaccination policy requiring vaccination. The server chose not to get vaccinated and was unable to obtain a medical exemption. The employer placed her on unpaid leave. She then sued for constructive dismissal.

“The Albert Court found that she was not constructively dismissed for this layoff because the employer had acted reasonably and lawfully and had justification in enacting the vaccination policy,” said Swann.

The court noted that the employer in this case balanced all relevant interests — including its business interests and being able to operate safely for its workers and customers.

“They didn’t terminate her for failing to comply with the policy. Rather, they placed her on a leave,” she said.

This ruling reminds us that courts are inclined to impose more serious consequences and be less lenient on employees when they are breaching policies related to safety, said Swann.

“If this employee was simply laid off, the court probably would have found she was constructively dismissed,” she said. “The court essentially indicated that employees are not entitled to continue in the workplace if their presence jeopardizes employees or customers health and safety or the employer’s business operations.”

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