May 11, 2017 By: Christopher C. Rootham
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If I am terminated with working notice and decide to work through that notice period, when can I file a claim for wrongful dismissal?

Calendar with notice deadline circled

A recent Ontario court case wrestled with this question, deciding that the deadline for employees to commence an action begins to run when their employer gives them “working notice.”

The facts

In Bailey v Milo-Food & Agricultural Infrastructure & Services Inc., an employee with forty-one years of service was given two years of working notice by his employer, commencing on March 23, 2013. The employee worked through that two-year notice period, and then started a claim against his former employer on December 21, 2015. The employee claimed damages for reasonable notice and statutory severance under the Employment Standards Act, 2000 (ESA), as well as other claims based on bad faith and human rights breaches.

The decision

The employer defended on the basis that the employee’s claim was filed outside the two-year limitation period for wrongful dismissal claims. The motions judge agreed with the employer. The key legal issue for the judge was whether the limitation period commenced on (1) the notice date, or (2) the last day of work. The motions judge concluded that the limitation period for wrongful dismissal commences on the date of notice of termination, even when the actual end of employment is in the future.

Statutory severance

The employee also advanced a claim for statutory severance under the ESA. The statutory severance claim was important because it is not subject to mitigation – the employer had to pay the employee 26 weeks’ wages regardless of the length of working notice. The judge also concluded that the claim for statutory severance began to run from the date of notice, not the date of termination. The judge’s terse reasons for that conclusion were as follows:

With regard to the entitlement to severance pay claim, I reach a similar conclusion but on a statutory basis. Mr. Bailey’s entitlement to severance arose when he was dismissed by the notice of termination received on March 18, 2013: see s. 63(1)(a), Employment Standards Act, s. 63(1)(a). It is on this date that the limitation period for this claim began to run.

I have considered but disagree with the plaintiff’s position that s. 65(1) of the Employment Standards Act indicates the severance date should be at the end of work. Section 65(1) is the calculation section, not the entitlement section. Entitlement is by reason of severance per s. 64(1) and severance is by dismissal per s. 63(1).

With respect to the judge in this case, that is not what s. 63(1)(a) of the ESA says. That paragraph states that an employer severs the employment of an employee if:

(a) the employer dismisses the employee or otherwise refuses or is unable to continue employing the employee

[…]

(e) the employer gives the employee notice of termination in accordance with section 57 or 58, the employee gives the employer written notice at least two weeks before resigning and the employee’s notice of resignation is to take effect during the statutory notice period.

Paragraph 63(1)(a) does not state that employment is “severed” if an employer gives notice to an employee. Rather, it states clearly that an employee is severed if the employer “dismisses” the employee. The dismissal – not the notice – is the triggering event. Notice only becomes relevant under s. 63(1)(e) if the employer gives notice and the employee resigns (with two weeks’ notice) during the statutory notice period.

Take-aways

Until this matter is resolved by a higher court, employees must be careful to commence an action for wrongful dismissal – including an action for statutory severance – within two years of being given notice of their dismissal.

For more information on working notice and what your entitlements are, please contact our Employment Law Group.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2017 Nelligan O’Brien Payne LLP.