Executive Summary: Key Legal and Evidentiary Issues

• Found that an employer cannot impose a temporary layoff without clear contractual authority or employee consent.

• Determined that the layoff constituted constructive dismissal at common law.

• Rejected the employer’s argument that a COVID-19 regulation suspended common law rights.

• Dismissed the frustration of contract defence due to insufficient evidence of permanent disability at the time of termination.

• Awarded 16 months’ reasonable notice based on service length, role, age, and pandemic-related job market impacts.

• Declined to award punitive or moral damages due to lack of direct connection between employer’s conduct and the employee’s harm.

Facts of the case

Richard Turcotte was employed by Grenville Management Inc. for over 14 years, ultimately working as an IT specialist. In March 2021, Grenville placed him on a temporary layoff citing reduced demand during the COVID-19 pandemic. The layoff notice referenced the Employment Standards Act (ESA) and requested Mr. Turcotte’s agreement to extend the layoff duration. Mr. Turcotte signed only to acknowledge the notice and agreed to the extension but not to the initial layoff itself.

Mr. Turcotte did not look for alternate work, believing the layoff to be temporary. His health later deteriorated, and by the end of 2021, he was unable to work due to medical issues including lymphedema, spinal stenosis, and a pulmonary embolism. Grenville did not pay any severance and later issued a recall notice in 2023—after learning of Mr. Turcotte’s disability—claiming he remained employed.

Mr. Turcotte sued for constructive dismissal, asserting that the unilateral layoff without consent violated the terms of his employment contract and common law rights. Grenville argued the employment contract was frustrated due to Mr. Turcotte’s medical condition and further claimed that a provincial COVID-19 regulation (O. Reg. 228/20) shielded it from liability.

Court’s analysis and findings

The court held that Grenville had no contractual right to impose a layoff unilaterally. While the employment agreement allowed Grenville to ask for a temporary layoff, it did not permit it to require one. The court found Mr. Turcotte’s consent to extend the layoff did not equate to consent for the initial layoff itself, which was presented as a done deal. Therefore, the layoff constituted constructive dismissal at common law.

Grenville’s argument that the contract was frustrated due to Mr. Turcotte’s disability also failed. The court found the evidence—largely based on a brief physician letter—was insufficient to prove Mr. Turcotte was permanently incapable of work at the time of termination. Moreover, Grenville's own recall letter undermined this position.

The court rejected Grenville’s reliance on O. Reg. 228/20, which the company claimed shielded it from common law liability. Citing Coutinho v. Ocular Health and related cases, the court found that the regulation may affect ESA rights, but does not override the common law due to section 8(1) of the ESA, which preserves civil remedies.

Applying the Bardal factors, the court awarded 16 months’ notice in lieu of termination, considering Mr. Turcotte’s age, years of service, and limited re-employment opportunities due to the pandemic. Although the employer’s conduct was criticized—particularly the strategic recall letter issued after learning of Mr. Turcotte’s disability—the court declined to award punitive or moral damages. It found no sufficient causal link between the employer’s conduct and any additional harm suffered by Mr. Turcotte.

Outcome

Mr. Turcotte succeeded in his constructive dismissal claim and was awarded damages equal to 16 months’ reasonable notice, with salary, benefits, and interest to be calculated. His claims for punitive and moral damages were dismissed. Costs and final amounts were left to be resolved between counsel or by further judicial assistance if necessary.