Thursday 4 January 2024

No Implied Term in Employment for Layoff for COVID State of Emergency

By now one might have thought that the issue of whether an employer had the legal right to layoff an employee in the face of the COVID 19 pandemic would have been resolved. And yet in the case of Webb v. SDT North America, 2023 ONSC 7170, heard June 12, 2023, with further written submissions delivered September 8, 2023, and September 29, 2023, with reasons for decision released on December 19, 2023, the court was once again asked the question of whether a “COVID layoff” constituted as dismissal.


The case concerned the plaintiff, Webb, who sought summary judgment after being laid off by his employer, SDT North America, following the declaration of the COVID-19 pandemic in March 2020. Webb was informed on March 22, 2020, to stay home and received his layoff notice three days later. The defendant later became an essential service, but Webb was not recalled and believed he was constructively dismissed.

The defendant employer argued that the plaintiff's layoff should be designated as Infectious Disease Emergency Leave (IDEL) and that this designation negated any claim of constructive dismissal. It contended that in the specific context of government-imposed restrictions during the global pandemic, a temporary layoff would be reasonable and could be imposed as an implied term of the oral contract of employment. Essentially, the employer argued that the extraordinary circumstances of the pandemic and the government restrictions that affected the economy implied a term in the employment contract that allowed for temporary layoffs during such emergencies.

Decision of the Ontario Superior Court

In rejecting the employer’s argument Justice Suzan Fraser provided the following reasons for decision:

[5] It is well-established that an employer has no right to unilaterally lay off an employee unless the contract provides to the contrary. The Plaintiff asserts that there was no provision in the employment contract that contemplated a layoff and that, as a result, he was constructively dismissed and is entitled to damages.

[29] Section 8 of the ESA provides that subject to s. 97 of the ESA no civil remedy is affected by the Act. Section 97 is not applicable.

[30] This Court has held that the IDEL provisions do not preclude a common law claim for constructive dismissal (see Fogelman v. IFG 2021 ONSC 4042 at paras. 46-48 and Coutinho v. Ocular Health Centre Ltd. 2021 ONSC 3076 at paras. 43-44 46). Both decisions held that IDEL applies to constructive dismissal within the meaning of the ESA and that the IDEL regulation does not affect a claim for constructive dismissal at common law. Each decision relied on the language of s. 8 under the ESA.

[31] I agree with and adopt that analysis. Therefore although the layoff meets the definition of IDEL, the Plaintiff maintains a common law right to sue for constructive dismissal.

[37] I have outlined above that I find that the Plaintiff was laid off without his consent. It is clear that at all times he wanted to be working. I also find that the remarks made in the early days of the layoff and the pandemic are not determinative because the Plaintiff did not have a reasonable opportunity to assess the change in his employment. Once he did have an opportunity to assess the situation he obtained legal advice and pursued his claim of constructive dismissal all within a matter of weeks of the layoff.

[38] In examining the implied terms of the contract I must assess what the parties would have agreed to when forming the contract had they turned their minds to the type of situation which later transpired. Mifsud v. MacMillan Bathurst Inc. 1989 CanLII 260 (ON CA) at para. 18. There the Court of Appeal cautioned that a term should not be implied unless it represents the intention of the parties. As noted above in Pham where the employment contract has no express term concerning layoffs a right that an employer may do so will not be readily implied.

[39] The Defendant submits I should find that it is implicit in the oral contract of employment that in the specific circumstances that faced the parties in Spring 2020 a temporary layoff would be reasonable and could be imposed.

[40] There is no basis for me to so find. The Defendant asked the Plaintiff to stay home and then laid him off. Mr. Rienstra did not tell the Plaintiff how long the layoff would be. He continued to employ others and the business was deemed an essential service. I do not think such a term can be implied in the circumstances.

[41] I find therefore that the contract did not contain an implied term permitting a layoff in these circumstances and that the Plaintiff did not acquiesce or condone the layoff. As a result, I find that the Defendant constructively dismissed the Plaintiff on March 25, 2020, the date reflected in the Record of Employment.


As I noted at the outset of this post, this decision is not a new one. Indeed, most would have considered the issue to be settled law by this point. For those employer still attempting to argue that IDEL negated common law constructive dismissal I suggest it may be time to concede the point.

Takeaways for Employers

The takeaway for employers is that it is prudent to include a right to layoff provision in your written contract of employment. Absent such contractual right it remains clear that there is no right to unilaterally lay an employee off from employment.

Contact Me

Sean Bawden is Experience. At Work.

I am an experienced employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP, which is based in Ottawa. I have appeared in courtrooms all across Ontario from Stratford, to L’Orignal, to Thunder Bay.

For 2.5 years I was in-house legal counsel providing employment law advice to one of Canada’s largest corporations and appeared in labour courts and tribunals literally the world over.

I am also a part-time professor at Algonquin College teaching Employment Law. I have previously also taught Trial Advocacy for Paralegals and Small Claims Court Practice.

I can be reached by email at or by phone at 613.238.6321 x233.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

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