Although lay-offs are permitted and regulated under the Employment Standards Act of Ontario, they have been historically considered a constructive dismissal at common law. One of my cases from 1996, McHugh v Fitness Canada Health Spa helped establish that line of cases. The theory underneath was that the Employment Standards Act establishes minimums and by its wording does not seem to oust the common law.
A month or so ago, a Superior Court decision came out saying that nothing had changed, i.e. Covid did not change the legal landscape and the McHugh line of cases was still the law.
Last week however, another Superior Court judge considered the recent pro business changes made by the Ford government to the Employment Standards Act, and held that these changes also affect the common law. The bottom line in that case is that the judge held there was no constructive dismissal via lay off, at least in Covid times.
It is unclear whether any party in these two cases is appealing up to the Ontario Court of Appeal.
Thus, in the short term, we have some real legal uncertainty in this province about whether lay-offs are constructive dismissal. Thus, lawyers representing employees would be wise to find something other than the lay-off itself to use as a secondary argument to argue for constructive dismissal at least until the law in this area gets clarified by an appellate court ruling.