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Does a limitation period commence at the time notice of termination is given? Or on an employee’s last day of work?
Limitation periods on the commencement of civil actions are governed by statue. In the province of Ontario, the general source is the Limitations Act, 2002, S.O. 2002, c. 24.
With specific reference to wrongful dismissal claims, the applicable limitation period for bringing a lawsuit is two years. This blog post will venture the question of “when does the two-year time period begin to run?”
Bailey v. Milo-Food & Agricultural Infrastructure & Services Inc., 2017 ONSC 1789
In this case, the employee was provided with two years’ working notice of his termination and worked for the entire notice period. In and around six months after his last day of work, the employee commenced an action for wrongful dismissal and later also included a claim for entitlement to severance pay amongst other claims.
The employer moved a motion to strike out the Plaintiff’s statement of claim pursuant to r. 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, on the grounds that the action was beyond the two-year limitation period, and was thus statute barred. The employer’s position was that the applicable two-year limitation period commenced when the Plaintiff received notice of his termination on March 18, 2013.
The Plaintiff argued that the limitation period began to run from his last day of work on March 22, 2015, not on the date he received notice. Accordingly, his claim was brought well within the two-year time period.
So, when does the limitation period begin to run?
The Motion Judge relied on the leading case in Ontario for the commencement of the limitation period in a wrongful dismissal action is Jones v. Freidman, 2006 CanLII 580 (ON CA). The Ontario Court of Appeal held at para. 4:
A limitation period commences when the cause of actions arises. In a breach of contract, the cause of action arises when the contract was breached. For the purposed of a wrongful dismissal action, the employment contract is breached when the employer dismisses the employee without reasonable notice.
The Motion Judge also considered cases decided after Jones that approached the same issue, and found that none concluded that the limitation period begins to run from the last day of work: Kirkland v. Lohmann Tierzucht Canada Ltd., 2007 CanLII 19422 (ON SC), Dixon v. Hanning House Ltd., 2007 CanLII 54954 (ON SC), Webster v. Alimore Trading & Manufacturing Co., 2010 ONSC 3854 and Zawislak v. Siemens Canada Ltd., 2012 ONSC 1043.
Counsel for the Plaintiff argued that the employer could have changed its mind (rescinded the termination), or sold the company during the Plaintiff’s working notice period, making the end of employment the correct starting date of the limitation period. The Judge stated that while that may be possible, he agreed with Horkins, J. from the Jones trial decision, at para. 14, that any change after the notice of termination is given does not change the fact that termination still occurred on that date.
With regards to severance pay, the Judge disagreed with the Plaintiff’s position that s. 65(1) of the Employment Standards Act (“ESA”) indicated the severance date should be at the end of work.
The Judge concluded that the Jones decision was binding, and therefore the cause of action for wrongful dismissal and severance pay claims arose on March 18, 2013, when the Plaintiff received notice of his termination. Since the statement of claim was filed after the expiry of the limitation period, the claims for wrongful dismissal and severance was found to be statute-barred.
Monkhouse Law Analysis
With respect to the Court it appears that applying the same test for the ESA minimum amount and the severance payment would not be correct.
A fundamental part of limitations is discovery, and the failure to pay severance would not be discoverable until after the employee had ceased to work and the employer then failed to provide the severance payment.
Employers have seven days after employment ends to pay severance, so the limitation period could not start to run before that date based on the fact that the employee could not know. And in any event, even if the employer told the employee they were going to breach merely saying that itself is not enough to start a limitation period.
The employee in this case obviously should have been able to claim the ESA amounts, but since the focus was common law this was left aside (but for a potential appeal, which would be very reasonable).
If you have been terminated, it is best to talk to a lawyer specializing in Employment Law as soon as possible. Please contact Monkhouse Law today at (416) 907-9249 for a free 30 minute consultation over the phone to discuss your options.
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