November 21, 2019
Effective January 1, 2020, the monetary claims limit for Small Claims Court in Ontario will increase from $25,000.00 to $35,000.00 (excluding interest and legal costs). Of note, the previous limit has been in place since 2010 when the limit was increased from $10,000.00.
Small Claims Court is a branch of the Superior Court of Justice that hears civil disputes (such as disputes regarding reasonable notice upon termination owed to employees). If a person has a claim that exceeds the maximum limit for Small Claims Court, the person has two options – elect to limit their damages to the maximum allowed at Small Claims Court or pursue the case through the Superior Court of Justice.
Small Claims Court provides many benefits to plaintiffs, such as a simpler process and the option to be represented by paralegals, law students, or oneself, all of which results in reduced costs to plaintiffs. Furthermore, while an unsuccessful plaintiff at the Superior Court of Justice could end up paying 50 to 60 percent of the other side’s legal fees, an unsuccessful applicant at the Small Claims Court can generally expect to pay only 15 percent of the amount claimed (to a maximum of $5,250.00 as of January 1, 2020).
Accordingly, employers in Ontario are likely to see an increase in small claims court claims brought by terminated employees regarding their entitlement to reasonable notice on termination. At a minimum, employers in Ontario can certainly expect terminated employees to use the threat of making a claim through Small Claims Court to incentivize employers to increase any severance package.
Below is a chart of the Small Claims Court claim limits for all provinces:
|Ontario||$35,000.00 (as of January 1, 2020)|
|Newfoundland and Labrador||$25,000.00|
In order to reduce liability when terminating an employee, employers in Ontario should ensure they have enforceable employment agreements in place for all employees. If you are not using employment agreements or you have not recently had your employment agreement reviewed, we strongly recommend you reach out to e2r® to speak with an Advisor.