In the Trenches

 By Eric Gionet, Partner 

On numerous occasions I have had employer clients being sued by a former employee for wrongful dismissal even though the employer complied with certain provisions of the Ontario Employment Standards Act, 2000 (“the ESA”).  Frequently, the employer client assumes that the lawsuit is completely without merit simply because the employer has complied with the statutory requirements of the ESA. Sometimes this is true, but many times it is not. 

What many employers fail to understand is that the ESA, in many situations, merely provides for the minimum obligations that an employer must meet. In many areas of employment law, the ESA does not establish the maximum or even a "reasonable" standard. Instead, it is critical that an employer first consult the employment contract, the hiring letter or established employment policies at the workplace before the employer take steps to terminate an employee’s employment, or even before the employer significantly modifies the duties or workplace conditions of an employee.  Simply consulting the ESA requirements will likely not be sufficient for the employer to understand its full legal obligations, which includes its contractual obligations, as opposed to its statutory obligations. 

Here is a good example of the above caution.  The ESA permits “temporary layoffs” as long as the conditions of layoff meet the requirements of the legislation. However, that does not necessarily mean an employer is contractually permitted to temporarily lay off an employee. Even though a temporary layoff may not contravene the ESA, in many situations in Ontario it may nonetheless be a breach of the employment agreement. Accordingly, in a situation where an employee’s employment contract or unwritten employment relationship does not specifically authorize a temporary layoff, the employee may have a valid legal claim for breach of contract (commonly referred to as “constructive dismissal” or “wrongful dismissal”) even though the employer has fully complied with the minimum statutory requirements for temporary layoffs under the ESA. 

The above comments are intended as a generalized, but blunt, word of caution:  just because an employer complies with the ESA, does not mean the employer is shielded from a potential lawsuit in Court for breach of the employment contract. It is important for employers in Ontario to understand the distinction between the statutory minimum requirements of the ESA versus the contractual terms and conditions of employment. In any given situation, if employer has any uncertainty, it is recommended the employer obtain professional legal advice before taking any hasty steps which could lead to an unexpected lawsuit.

By Jason Botelho, Associate

I hear these words almost daily. People get so caught up in emotion that they do not care what the cost consequences of pursuing a claim are. Instead they are bent on achieving their own sense of justice. When I hear those infamous words I am brought back to my first day of law school where my professor warned the entire class to “beware of the client who wants to sue based on principle”. You see, no matter what a client says about principle it almost ALWAYS comes back to the money. I have seen cases where the amount spent on legal fees exceeds the amount being claimed! This is especially evident in Small Claims Court where emotions run extremely high.

Litigation is not a cake walk. It is a slow moving machine that, once started, cannot be stopped with a flick of a switch. It is a multi-party process that no one party has full control over. It is for this reason that the system (see the Rules of Civil Procedure) allows the parties multiple opportunities for settlement.

Make no mistake, litigation is expensive. It is usually charged based on an hourly rate multiplied by time spent. First there is the pleadings stage, (i.e. Statement of Claim, Statement of Defence, Reply). These are then usually followed by Discoveries, then pre-trial conferences, then trial. While the Rules do provide some expedience for claims under a certain monetary amount, it still takes time to go through these steps. And remember time equals money!

Invariably, it can be months or years before a resolution is achieved and there is no guarantee that it will be the result you are expecting. What is certain however is that it took a great deal of money spent to get there.

Now, there may be legitimate reasons to commence an action i.e., breach of contract, negligence, etc. Regardless, in most cases it is worth balancing the costs of proceeding with a claim with the amount being sought. I always advise my clients to do this from the outset. This way they can fully judge for themselves whether the “principle” is worth it. 

So, the next time you hear someone say, “it is not the money it’s the principle!”, be a friend and explain this process to them. Maybe the money saved could be used to treat you out for dinner or a drink.