In a few months, Ontario employers may be in court more often over employment disputes. That’s because, on Jan. 1, 2010, the maximum damages in small claims court are rising from $10,000 to $25,000.
The court is designed for simpler and less costly actions — plaintiffs often represent themselves and there is less responsibility for the losing side to pay legal costs. This change will likely result in employees with slightly larger claims, who might have been discouraged from filing a lawsuit in the more costly and complicated higher courts, deciding to bring actions against employers, said Daniel Lublin, founding partner of Toronto employment law firm Whitten and Lublin.
As a result, employers could be bogged down with more claims that don’t necessarily have merit from employees emboldened by the decreased risk of going to court on their own.
“More cases with unrepresented litigants who don’t understand actual rights over perceived rights will go to trial,” said Lublin. “A lot of lawyers I know prevent people from going forward with fruitless claims.”
The increase in limits, the first since 2001, is part of changes enacted as a result of the Civil Justice Reform Project, a report issued in November 2007 by former Associate Chief Justice Coulter Osborne. There are additional changes that have significant impacts, both for employers and lawyers.
Two major changes that could affect employment law cases are the increase in the monetary limit of cases under the simplified procedure, from $50,000 to $100,000, and the inclusion of a two-hour limited examination for discovery in simplified procedure cases.
Simplified procedure streamlines the trial process for cases with relatively small claims by reducing and simplifying pre-trial procedures such as examination for discovery. Previously, there was no discovery in the simplified procedure. Under the new system, parties will be allowed two hours. In cases outside the simplified procedure, unlimited discovery is allowed.
The changes to the simplified procedure could have mixed results for employers. On the one hand, the monetary-limit increase will open the door for many more cases to be tried under simplified procedure. Many wrongful dismissal cases involve claims between $50,000 and $100,000 and, with these now qualifying for simplified procedure, some strategies for employers won’t be effective.
Tactics in regular trials used to drag out cases and make employee costs higher — such as lengthy discoveries and challenges to claims — won’t be available under simplified procedure, said Lublin. However, for cases at the lower end of the range that fell within the old limit for simplified procedure — under $50,000 — the implementation of limited discovery will allow employers to increase the length of the trial and make it harder on employees in smaller cases.
“The employee always wants to move the case along and the employer wants to extend it,” said Lublin.
Employers may find another advantage. Timelines for mandatory mediation sessions, a required part of the pretrial process, will be extended. Before a case goes to trial, courts assign a neutral mediator to help the opposing parties in a trial to either settle or narrow their dispute so the trial will be more efficient. The new rules will allow more preparation time for the mediation process, is a positive development for employers, said Lublin.
“The new mediation timetable is a terrible change for employees,” he said. “Mediation is where most cases settle and mediated settlements are usually preferable than trial decisions for employers.”
Quicker trials, more damages
But the biggest change will be problematic for employers, said Lublin. The cost rules for summary judgments will be amended to reduce the risk for those making a motion. A party can make a motion for a summary judgment for straightforward cases where there is no disputable issue to be addressed in a trial, such as if the action is only to decide reasonable notice.
Currently, a party who brings forward a motion would be on the hook for costs if the motion is denied, a risk for an employee with limited resources. The reduction of that risk makes it more likely employees will apply for summary judgment in other straightforward cases, such as wrongful dismissal, and judges may be more open to allowing it, said Lublin. This would speed up trials and make it more likely for damages to be awarded before employees have to mitigate their losses, leaving employers on the hook for larger damage awards, said Lublin.
Overall, more accessibility to the court system for employees means employers will need to pay even more attention to proper dismissal procedures. The message for employers is simple, said Lublin.
“Get terminations right — make sure packages are appropriate and review policies,” he said. “If they get it wrong, they’re more likely to end up in court.”
Across the country
Small claims court monetary limits
These are the limits for small claims court cases across Canada. Saskatchewan is currently moving to increase its limit to $25,000.
$10,000 (rising to $25,000 on Jan. 1, 2010)
Newfoundland and Labrador
No small claims court
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