A Wrongful Dismissal Suit or an ESA Claim?

Should an employee sue for wrongful dismissal or file a claim with an Employment Standards Officer at the Ministry of Labour?

You cannot do both!

The Ministry of Labour employs officers who will investigate and adjudicate upon employee claims for failure to pay wages, benefits or termination/severance pay, and they will do it without charge to the complainant. In cases involving smaller amounts duNwefoue and owing under the ESA, this can be a cost effective method of enforcing an employee’s rights.

However, if such a claim is filed by an employee, it will operate to preclude any wrongful dismissal lawsuit in the Courts, which can result in significant prejudice to an employee. For example, the maximum claim for termination pay in lieu of notice available to an employee with 15 years of service with their employer is eight (8) weeks of pay. By contrast, that same employee may have a wrongful dismissal claim for pay in lieu of reasonable notice of one (1) year of pay. Also, other claims which may accompany a wrongful dismissal lawsuit in the Courts (such as bad faith by the employer, breaches of the Human Rights Code, or mental distress) may also prejudiced.

The Employment Standards Act, 2000 is quite clear on this point:

When civil proceeding not permitted
97. (1) An employee who files a complaint under this Act with respect to an alleged failure to pay wages or comply with Part XIII (Benefit Plans) may not commence a civil proceeding with respect to the same matter. 2000, c. 41, s. 97 (1).
Same, wrongful dismissal
(2) An employee who files a complaint under this Act alleging an entitlement to termination pay or severance pay may not commence a civil proceeding for wrongful dismissal if the complaint and the proceeding would relate to the same termination or severance of employment. 2000, c. 41, s. 97 (2).
Amount in excess of order
(3) Subsections (1) and (2) apply even if,
(a) the amount alleged to be owing to the employee is greater than the amount for which an order can be issued under this Act; or
(b) in the civil proceeding, the employee is claiming only that part of the amount alleged to be owing that is in excess of the amount for which an order can be issued under this Act. 2000, c. 41, s. 97 (3).
In many cases, employees do not get legal advice before filing a claim with the Ministry and they are unaware that they may be nullifying their right to sue. Unfortunately, often the Employment Officers do not warn employees about this fact. However, it is specifically noted on the application form which states as follows:
“In most circumstances, the Employment Standards Act, 2000 does not allow employees to pursue the same claim against their employer through both the ministry claim process and the courts. You must choose one or the other. If the employment standards claim is for termination or severance pay, you will not be able to sue the employer in court for wrongful dismissal for the same termination.
If you have any questions about the above item, we suggest that you consult a lawyer before filling out this claim.
If you have already started a court action, you cannot file a complaint with the Ministry of Labour for the same matter”.

Under the old ESA, the Supreme Court of Canada reviewed the doctrine of issue estoppel and established that it had to right to allow such claims in the event of unfairness to an employee, (Danyluk v. Ainsworth Technologies – 2001 CarswellOnt 2434, SCC). However, the current form of the ESA legislation seems to expressly override the Court’s jurisdiction to do so. There have been no decisions of the Court to date related to the current ESA.