New Legislation Increases Award Cap to Terminated Employees
By Civita Gauley & Leanne Standryk
Terminated employees who are seeking compensation reflective of termination pay, statutory severance pay and unpaid wages owed to them often find themselves seeking out the assistance of the Ministry of Labour (MOL), Employment Standards Branch (ESB). The choice of the ESB as a forum for recovery is based on its accessibility and the minimal cost of pursing claims when compared to costs associated with a civil claim or wrongful dismissal lawsuit.
The ESB of the MOL is tasked with the administration of the Employment Standards Act, 2000 for example, claims of outstanding termination pay, severance pay and wages. It does not enforce statutory claims that originate from other legislation nor does it entertain claims for reasonable pay in lieu of notice.
The MOL and the courts have concurrent jurisdiction to deal with the legal issues arising out of employment relationships specific to entitlements under the Employment Standards Act, 2000. Therefore, to avoid duplicity of proceedings, an employee will be required to choose the forum in which they wish to enforce their statutory entitlements. The downside for employees who pursue claims through the Ministry of Labour has, up until now, been the limit on claims that are available as well as the $10,000.00 monetary limit on available awards for unpaid wages.
New legislation that affects those limits on awards by the MOL means we will likely see changes to the number of employees who utilize the Ministry of Labour forum to address their employment issues. Last Fall, the Stronger Workplaces for a Stronger Economy Act, 2014 was passed, which in turn has amended the Employment Standards Act, 2000 (ESA). The amendments reduce the hurdles faced by employees who seek a remedy through the Ministry of Labour, including eliminating the $10,000.00 ceiling on the recovery of unpaid wages. In addition to the elimination of the cap on monetary recovery, employees also have up to two (2) years to recover those wages, rather than the six (6) or twelve (12) month deadline currently in place. By practical example, employees who have been improperly denied overtime pay on a regular and consistent basis may now be able to claim losses arising from the previous two (2) years, which amounts are without a cap of $10,000.00 on the quantum of the award.
The changes bring Ontario into step with other Canadian jurisdictions that have removed caps on recovery and set longer time limits for employees to recover outstanding pay. The legislative changes also support Ontario’s Poverty Reduction Strategy and are designed to increase protections for vulnerable workers.
The Stronger Workplaces for a Stronger Economy Act reflects the research findings and policy reforms proposed by groups such as the Law Commission of Ontario, the United Way and McMaster University in their respective reports on poverty and vulnerable workers
Despite the changes that expand rights of recovery to employees, both employers and employees should keep in mind that the legislative changes apply only to wages that became due after February 20, 2015. Wages that became due prior to that date continue to be subject to the $10,000.00 cap.
The same caveat is true of the deadline for filing a claim for unpaid wages. The new two (2) year window to file a complaint applies to claims for unpaid wages accrued to employees after February 20, 2015. The old timelines, namely a six (6) month deadline for unpaid wages and a one (1) year deadline for unpaid vacation pay apply for any claim predating February 20, 2015.
The foregoing legislative amendments are a move by the Ontario government to broaden the availability of the remedies available to aggrieved employees through the Employment Standards Branch. The changes will likely prompt an increase in the number of ESB claims and potentially changing the way Employers conduct business with their employees.
Leanne Standryk and Vita Gauley are Labour and Employment Lawyers practicing at Lancaster Brooks & Welch, should you have any questions about Labour & Employment Law, you may contact them at Lancaster Brooks & Welch LLP in St Catharines at 905-641-1551