Weilers LLP

COVID and Constructive Dismissal

COVID and Constructive Dismissal

April 18, 2024

By Brian Babcock 

Cases related to loss of employment due to COVID shutdowns continue to work their way through the system.

Employers generally do not have a right to layoff employees but some employers saw it differently during the COVID shutdowns.


There may be a “COVID bump” increasing damages in lieu of notice in a case of wrongful dismal. This applies even where the Bardal factors usually used to assess these damages entitle the Plaintiff employee to the “rough upper limit” or “soft cap” of 24 months pay in lieu.


The Plaintiff in Chalmers v. Airways Transit Service Ltd. and Badder Capital Group Ltd. was a 53 years old Vice-President of his employer with 28 years of service, who took 20 months after his layoff to find alternative employment at a lower salary. During the COVID shutdown, he performed work as needed without compensation. Despite this, other managers were recalled before him. These factors made him what we call a “sympathetic plaintiff”.

On the Bardal factors, the judge would have assessed damages at 24 months.

The judge considered prior cases for and against the COVID bump. He determined that the decisions favouring the bump were more similar to the Chalmers facts- both the timing of the dismissal (there is a case disallowing a bump for a dismissal just before the shutdown), and the nature of the skills of the employee (another case involved a computer expert, who the judge decided ought to be highly employable during the period employees were working remotely).

Chalmers is also significant for its review of the effect of the Infectious Diseases Emergency Leave regulation. Many employers took that at face value, and believed that, contrary to the usual law, a layoff during the time the regulation was in force did not create a constructive dismissal. This judge, on the facts of this case, still found a constructive dismissal. He decided that the regulation only affected claims under the Employment Standards Act, not common law wrongful or constructive dismissal court actions. We find the judge’s reasoning somewhat tortured, and it is so far only one judge’s opinion.

This case also consolidates the law in several other areas of constructive dismissal law including:

  • The test for constructive dismissal
  • Mitigation of damages
  • Aggravated or moral damages
  • Punitive damages


Interestingly, the judge did not award aggravated or moral damages, which require proof of emotional distress, but awarded punitive damages based upon a lack of good faith displayed in how the employer dealt with the employee.

It is always risky to rely on a trial level constructive dismissal decision, which is often affected by the impression that the trial judge of the employee, and as in this case, of the employer’s conduct. But if you are relying on this regulation to defend a constructive dismissal case, your ex-employee now has a precedent to point to.

And we already know the Court of Appeal tends to empathize with employees, who are usually seen as vulnerable. Add long service and the risks are significant.


  • A “covid bump” may increase damages for constructive dismissal during the COVID shutdown.
  • This may be true even if the bump results in:
    • a damages award exceeding the 24 month “soft cap” on damages.
    • the employer relies on the emergency regulation as a defence.
  • Bad faith in managing employees will result in more generous damages.
  • A failure to mitigate must be proven by the employer, and an employee, especially a sympathic appearing employee, will be given the benefit of the doubt.



Weilers LLP has a proud tradition of pioneering employment law in Thunder Bay and Northwestern Ontario. We combine this with our progressive approach which reflects recent trends and ongoing developments in the law. If you need legal assistance, whether advice, with negotiations, in court or before a tribunal, we may be the lawyers for you.