Oct 12

Court of Appeal: Limitation Period for Severance Pay Claims Runs from End of Employment, not Notice of Termination, Toronto Employment Lawyer


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In August 2017, we wrote about Bailey v Milo-Food & Agricultural Infrastructure & Services Inc, 2017 ONSC 1789. In that case, the Court dismissed an employee’s claim and held that claims for wrongful dismissal and severance pay must be brought within two years of notice of termination, as opposed to two years from the last day worked. The two-year limit is found in the Limitations Act, 2002, SO 2002, c 24, which sets limits on how long one can wait before bringing a civil claim.

The employee appealed this decision and the Court of Appeal released its decision in Bailey v Milo-Food & Agricultural Infrastructure & Services Inc, 2017 ONCA 1004. The Court of Appeal found for wrongful dismissal the motion judge was correct in striking the employee’s claim. The Court of Appeal agreed with their earlier decision in Jones v Freidman, 2006 CanLII 580 (ON CA), which conclusively held that limitation periods for wrongful dismissal matters occur from the date of termination, regardless of an amount of working notice given or the employee’s last day of work.

The Court of Appeal however disagreed with the motion Judge striking the employee’s claim for severance pay under the Employment Standards Act, 2000. Severance pay is provided to an employee as a lump sum seven days after their last day of work. The Court held that it was credible to argue the limitation period should run from the date of completion of employment, as that is when the employer’s obligation to pay crystalizes. Thus the Court allowed the employee to continue with this claim for severance pay.

It should be highlighted that the employee’s claim for severance pay survived the motion to strike and thus was allowed to continue through the litigation process, it was not an award of the severance pay to the employee.

The Court’s reasoning ultimately mirrored our comments contained in our post about the initial  decision. However, these cases highlight the importance of receiving prompt legal advice and taking action right away. Unfortunately the employee in this scenario may have had a valid wrongful dismissal claim but gave up that claim by waiting too long.

If you have been terminated or are considering terminating an employee, get legal advice right away. Contact Monkhouse Law for a free consultation.

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