New Ontario decision shows cost for employers in ignoring wrongful dismissal claims
A recent decision by the Ontario Superior Court highlights the risks of non-engagement and the importance of clear employment contracts and documentation, even with short-tenured employees.
The employer, a plumbing company in Ontario, was ordered to pay the former employee six months’ of notice equaling just over $170,000 in damages, including monthly commission, gas, salary and benefits amounting to almost $19,000 per month.
The employee’s relatively short tenure of 1.4 years, her age (47) and the nature of her role were all factors, but the employer’s lack of participation led to the default decision.
As Carson Healey, employment lawyer at Gowling, explains, employer non-participation in litigation can lead to significant financial liability, even if the employer might have had a valid defence or mitigating evidence.
“This person got common law notice, so that means that either they didn't have a contract of employment, or that they had a contract and it wasn't enforced,” she says.
“Either of those is going to yield a common law reasonable notice result.”
Delays, costs, and employer conduct
The court’s decision also referenced the employer’s repeated delays and “roadblocks” during the litigation process. These tactics, such as failing to respond to communications or cancelling scheduled discoveries, can backfire on employers – not only do they frustrate the process, but they can also increase the amount the employer is ordered to pay if the case is lost.
Healey encourages employers to resist the temptation to drag their feet in providing information or to muddy the water with convoluted arguments, because courts look unfavourably on parties who unnecessarily prolong litigation or make the process more difficult for the other side.
“Is this something that I'm just throwing a wrench in the works? Because if that's the case, the court will eventually see through that,” she says.
“They may decide to award a greater cost award against the employer if they eventually lose at the hearing.”
This case involved a short-tenured employee, given a six-month notice period. The decision demonstrates that even employees with relatively short service can be awarded substantial notice, depending on the circumstances.
“The factors that the court will take into account in awarding a notice period will be character of employment, length of service, age of the employee, availability of similar employment having regard to experience, training, and qualifications,” Healey says.
“Length of service and age are the factors that are usually set up initially to determine a range.”
The fact that the employer did not defend the case also played a role in the outcome, she adds, as the court only had the plaintiff’s evidence to consider.
Mitigation, employer evidence and employment contracts
Mitigation is a key concept in wrongful dismissal cases – employees are expected to try to find new work to reduce their losses, but it is up to the employer to prove that suitable jobs were available and that the employee did not make reasonable efforts to secure them.
Healey recommends as a best practice that employers regularly check job postings for roles the employee in question could or should apply to, and to send those jobs to the employee’s counsel, to show they are making a genuine effort to assist.
The decision was based on common law notice, as there was no enforceable contract limiting notice. For Healey, this highlights the risk for employers who rely on outdated or unenforceable contract language; she emphasizes the importance of reviewing employment contracts regularly, particularly in light of recent trends in employment law which has seen courts more willing to invalidate contract language that was once considered standard.
“Simply look at your contracts every year,” she says.
“The courts are increasingly striking down previously considered enforceable language. So it's really important to make sure that's as up-to-date as possible.”
