On February 20, 2015, several significant employment law changes will take effect that will benefit employees. Some of these include indexing the minimum wage and expanding the definition of a worker under the health and safety legislation. See here for more details.

Of all of the changes included in Bill 18, we are particularly interested to see how the changes under the Employment Standards Act (ESA) will affect claims related to wrongful dismissal.

Employment Standards and Wrongful Dismissal

An employee can claim for termination pay and severance pay under the ESA, or claim for wrongful dismissal damages in the courts.

If an employee files a complaint under the ESA then the employment standards Officer assigned the complaint can only order the employer to pay the termination and severance pay set out in the ESA. The maximum termination pay an Officer can order is eight weeks. The maximum severance pay is 26 weeks.

The amount of termination and severance pay provided in the ESA is the minimum required by law. A terminated employee must accept the minimum only if he or she agreed in a legally binding termination clause agreeing to receive the minimum.  A court, on the other hand, can order an employer to pay up to 24 months termination pay (104 weeks).

Under the ESA complaint process, the employee and the employer are asked to provide documents and written submissions of their positions to an employment standards Officer. The employee does not have a right to see the documents or submissions provided by the employer. If the employee has a lawyer, the Officer does not have to contact the lawyer directly, but can still deal with the employee on a regular basis – often leaving employees to provide information and answers to an Officer that they are unsure about. If the Officer conducts a hearing in the matter, the employee and employer are expected to give oral evidence, but neither can be cross-examined.  If there is a lawyer, he or she cannot make submissions to the Officer at the hearing. At the end of this administrative process the Officer decides whether to issue an order to pay to the employer.

An employer can appeal the Officer’s decision to the Ontario Labour Relations Board where a formal hearing takes place. If the employee hires a lawyer to represent her at this appeal, the Ontario Labour Relations Board will not order the employer to pay the employee’s costs even if the appeal is denied.

Changes to Employment Standards Act Adjudication

As of February 20, 2015, there will be no limit on the amount of money an employment standards Officer can order an employer to pay an employee under the ESA. Currently there is a cap of $10,000.  The changes will also increase the time limit for filing a complaint under the ESA. An employee will be able to wait for up to two years to file a complaint under the ESA. The current limit is six months.

We anticipate that these changes will result in more employees filing claims for termination pay and severance pay under the ESA instead of bringing wrongful dismissal.

Evaluation of Changes

Not all employees will be better off filing a complaint under the ESA instead of commencing a wrongful dismissal in the courts.

Employees who are better off filing a complaint under the ESA include:

1. Employees who find alternative employment shortly after being terminated. Under the ESA an employer must pay the full amount of termination pay and severance owing, whether or not the employee gets another job right away. In the courts, any amount that is earned in another job during the notice period is deducted from amounts owed to the employee.
2. Employees who have worked a little more than five years for an employer that has a payroll of more than $2.5 and have found alternative employment within 10 weeks of the termination date.

Employees better off commencing a wrongful dismissal action include:

1. Short service management employees who have not found alternative employment within three months of the termination date.
2. Employees who have worked more than three years and who do not find alternative employment within three months of the termination date.
3. An employee who wants to claim punitive damages or damages for the intentional infliction of mental stress in connection with her termination. An employee cannot claim for these damages under the ESA.

If you have questions about your employment rights or have been temrinated and would like to speak to an employment lawyer, please contact us at [email protected] or 1-888-640-1728 (toll free) or 647-633-9894 (within the GTA).