Recent Developments in Ontario Employment Law

On August 20, 2021 the Medical Officer of Health for Toronto issued a “strong recommendation” that every local business implements a COVID-19 vaccination policy.  The City of Toronto has also provided guidance on the key components of such a policy. On August 24, 2021, O. Reg 364/20, Rules for Areas at Step 3 and at the Roadmap Exit Step was issued and requires any business or organization open for business to operate “in compliance with the advice, recommendations and instructions of public health officials…”. The emerging consensus is that the combination of the regulation and the recommendation means that any business or organization open for business in the City of Toronto must have a vaccination policy that encourages vaccination.

Court decisions are going back and forth on whether employees laid off during the pandemic where there was not a contractual right of layoff can claim constructive dismissal. Ontario’s Employment Standards Act (“ESA”) was amended to provide for an Infectious Disease Emergency Leave (“IDEL”) which, in part, provided that those laid off during the pandemic would be deemed to be on IDEL rather than laid off within the meaning of the ESA. The difficulty with the amendment was that it did not explicitly address whether it was intended to affect the common law requirement that there must be a contractual right of layoff. The most recent decision on June 7, 2021, in Taylor v. Hanley Hospitality Inc. o/a Tim Hortons  held that the common law requirement became irrelevant in light of the IDEL. Some prior decisions, such as Coutinho  v. Occular Health Centre Ltd. had held that the amendment of the ESA to create the IDEL by its terms preserved the right to make a common law claim of constructive dismissal. The Taylor decision has been appealed to the Ontario Court of Appeal.

Court decisions are now giving credit to employees for longer common law reasonable notice periods in wrongful dismissal cases where the dismissal occurred after the commencement of the pandemic. In Kraft v. Firepower Financial Corp. the Court granted an additional month of pay in lieu of notice, which was a 10% premium. In that case, the Court also reiterated that commissions on sales that closed after termination but during the ESA notice period must be paid irrespective of any contractual provision to the contrary as they are protected as “wages” within the meaning of the ESA.

A recent decision in Morningstar v. WSIAT confirmed that an employee’s action against an employer is barred under Ontario’s Workplace Safety and Insurance Act only if it relates to a work-related tort (such as negligence) as opposed to a claim for breach of the employment contract, and that workplace conduct pertaining to bullying, harassment and a poisoned environment can give rise to both a barred tort claim and an unbarred contract claim.

In Russell v. The Brick Warehouse LP  the Court reminded employers that a severance package offering more than the ESA minimum notice payment and benefit continuation period must make it clear that the ESA minimums will be met if the package is not accepted. It also reminded employers that although a reason for a termination without cause need not be volunteered, the employer must act in good faith when terminating employment, which includes being candid if asked for the reason and not being unduly insensitive in the manner of termination.

In Hawkes v. Max Aicher, the Court reinterpreted the severance pay provision of the ESA by holding that the $2.5 million payroll threshold refers to the employer’s global payroll, not just its Ontario payroll.  Severance pay of one week per year of service is due to terminated employees with more than five years’ tenure.


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About the Author

W. Eric Key (Partner, Toronto), is a partner in the firm’s Toronto office and is a member of the labor and employment department. To contact Eric, email him at