Wrongful dismissal

A pending claim by a former employee is a liability worth seeing before signing. Ontario’s employment standards guide explains that some employees have rights under the common law that are greater than the notice, termination pay and severance pay in the Employment Standards Act, 2000 (ESA), and that an employee may sue a former employer in court for wrongful dismissal. The seller’s disclosure duties are covered in what employee liabilities a seller must disclose.

One route or the other

Under ESA s.97(2), an employee who files a complaint alleging an entitlement to termination pay or severance pay may not start a civil proceeding for wrongful dismissal over the same termination or severance. Section 98(2) works the other way round. Under s.97(4), an employee who has filed a complaint may still start a civil proceeding if the complaint is withdrawn within two weeks after it is filed.

Where the rules differ

That is Ontario’s regime. Other provinces run their own, and this entry does not describe them. For federally regulated employers, Division XIV of the Canada Labour Code (s.240) lets a person who has been dismissed and considers the dismissal unjust make a written complaint, subject to the conditions in that section and s.242(3.1). Under s.167(3), Division XIV does not apply to employees who are managers.

• Ask the seller for every claim, demand letter or complaint from a former employee, including settled ones
• Ask whether an employment standards complaint was filed over the same termination
• Ask how the draft agreement allocates responsibility for claims about terminations before closing