Wrongful Dismissal Cases Backlogged in Ontario Small Claims Courts

Global HR

​Before the pandemic, the small claims courts in Ontario, Canada were an effective way to deal with wrongful dismissal cases. Designed to process claims under $35,000, the small claims courts could get cases settled quickly and efficiently and allow employees who had been wrongfully dismissed to get access to the money they were owed. 

“[The small claims court system] never used to be instantaneous, probably about a year process, if not more,” said Jonathan Kleiman, a small claims court lawyer in Toronto. “Now you’re probably looking at two to three years.”

Pandemic Leads to a System Backlog

The massive backlog in the small claims courts in Ontario is due to the COVID-19 pandemic, which paused activities in the courts for an extended period. “The trials stopped, the mediations stopped, the system basically shut down,” said Howard Levitt, an attorney with Levitt Sheikh in Toronto. “All of a sudden, you have two more years of backlog added on to the existing backlog.” This has left employees hoping to use the small claims courts waiting for longer and longer periods. 

Frustrated clients are writing every six months, asking “What the heck’s going on?” Kleiman said. “And then I explain [the backlog].”

Some lawyers are taking their clients’ cases to the superior court.

“It’s now taking longer to get to small claims court in Ontario, in most cities anyway, than it is superior court, which is ridiculous,” Levitt said.

The Flaws with Superior Court

Taking small claims to the superior court can potentially lead to a net loss for the client, due to the costs involved and the potential to recoup those costs.

“Let’s assume you go to superior court, rather than small claims court,” Levitt said. “You’ve got examinations for discovery, you’ve got motions, you’ve got all the trials and mediation. … Elaborate procedures don’t exist in small claims court system.”

All these procedures in the superior court can inflate the legal fees the client owes by thousands of dollars. In small claims court, it is possible for clients to reclaim their legal costs because of the small amounts of money at stake. The superior court is not designed to function in the same way.

“The courts will say, because you should have gone to small claims court to recover under $35,000, we will [award] you no costs,” Levitt said. “It’s foolish to go to superior court if the case is generally worth under $35,000.”

Another option some employees are using is to go through Ontario’s “Employment Standards” to recoup some of their money, but this has its own drawbacks. If an employee tries to take the Employment Standards route, it bars them from accessing the small claims courts later. 

“Small claims court or superior court would give [the employee] six months’ pay, but Employment Standards will give them four weeks’ pay,” Levitt said. “So if it goes to Employment Standards, [the employee] gets a quick four weeks’ pay, and they can’t go get their six months’ pay later on.”

Who Benefits, Who Loses?

The backlog in the system ultimately affects the employees the most negatively. “[Employees] are denied justice. And if you’re someone with a wrongful dismissal case for $20,000, or even $30,000, you’re probably not a senior executive, you’re probably fairly junior, you probably need the money,” Levitt said. “And you need your $20,000 more than a senior executive needs their $500,000.”

Employers end up benefiting from the backlog, because they are not facing the small claims court matters as employees are discouraged by the long wait times from pursuing their claims. “It’s giving employers the bargaining power to lever massively,” Levitt said. “It’s really changing the balance of bargaining power in the employment relationship after it’s terminated because of the backlog in the small claims court system with respect to more junior employees, or employees with more modest incomes.”

As courts start to open again, there is hope the backlog will ease. Selective use of Zoom and other videoconferencing tools could help as well. “I am starting to get an influx of settlement conference notices,” Kleiman sad. “They’re doing those by Zoom. So it seems like they’re knocking those out. They’re getting back on the ball with that.”

However, the use of Zoom is limited, and there is only so much that online conferencing can do at this point. “The fact that it’s on Zoom I assume should help them to move through things a little faster, but you still have 45 minutes for a settlement call,” Kleiman said. 

The necessary changes to tackle the backlog are likely systemic. 

“How do you change the system? You do it through either changing the administration of justice small claims court system, which is harder to do, or you do it by adding more judges, which is of course costly,” Levitt said.

Ultimately, the small claims court will have to find a way to catch up after the unforeseen complications of the COVID-19 pandemic, for the benefit of wrongfully dismissed employees.

“There’s a global pandemic,” Kleiman said. “It is what it is.”

Katie Nadworny is a freelance writer in Istanbul. 

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