Employment disputes often carry emotional weight, particularly for employees facing allegations of termination for cause, harassment, or unfair treatment. Understandably, individuals may feel stressed, perceive unfairness, and seek retribution against their employers.

However, the law expects parties to act reasonably in resolving their differences. Doing so saves legal costs and judicial resources, aligning with sound public policy.  Judges take the reasonableness of the parties into consideration when crafting their decisions, particularly on costs.

Acting reasonably entails making legally and factually viable claims, seeking remedies supported by law, and being open to concessions for settlement. Failing to do so carries significant risks and costs, as shown in these cases:

Escalating Legal Expenses and Costs Award

Pressing baseless claims or demanding unrealistic remedies can lead to mounting legal expenses and potential cost awards. While playing hardball may occasionally yield results, it typically favours employers. This approach prolongs negotiations, delaying payments and causing mental and financial strain on employees, especially if they are unemployed and must bear legal costs upfront. Moreover, courts may refuse to award costs in favour of or even against the parties acting unreasonably or refusing better settlement offers than those proposed at trial. Consequently, employees’ legal costs increase, diminishing their net gain.

For example, in Chin v. Beauty Express Canada Inc., 2023 ONSC 56, the employee won her case against the employer and was awarded wrongful dismissal damages of about $16,000.  The employee incurred $55,000 in legal fees. Ordinarily, some of those legal fees would be recovered through a costs award, as he had won the case.  However, even though the employee won the case and bettered the employer’s pre-trial offer to settle of $10,000, the court refused to award costs in her favour. The judge remarked that the trial was “an unfortunate waste of the parties’ resources”, “the Plaintiff’s pursuit of the extensive claim, …, appears to have been more a product of emotion than reason”, and “[h]ad the Plaintiff been more realistic in assessing the merits of the case, that controversy could have, and should have, been resolved in a far more efficient Small Claims Court hearing.”  The employee netted a loss of $40,000 for being unrealistic in pursuing her extensive claim, driven by emotion rather than reason.

In another example, the court even ordered costs against the employee, although the court supported some of the employee’s claims and ordered moral damages against the employer. In Colistro v. Tbaytel, 2019 ONCA 197, the Court of Appeal refused to review a trial court’s cost award against this employee.  At trial, the employee claimed damages for constructive dismissal and intentional infliction of mental suffering for over $3,000,000. The trial judge found that she was entitled to damages equal to pay in lieu of 12 months’ notice, less the short-term salary continuance and long-term disability benefits she had received over that period, leaving a net award of $14,082, plus moral damages of $100,000, and prejudgment interest.  Since the result was much lower than the employee’s original claim of over $3,000,000, the trial court held that the employer was substantially successful in the litigation and ordered the employee to pay $200,000 in costs to the employer, leaving her with a net loss of about $85,000, plus the legal costs she might have also incurred herself.

Lengthy Litigation and Diminished Damages

Another significant risk employees face is that they have an obligation to mitigate wrongful dismissal damages by looking for and accepting comparable positions. Otherwise, they are at risk of having any wrongful dismissal damages reduced for failing to mitigate their loss. Employment income during the common law notice period could also be deducted from the overall entitlement.

As such, the longer employees wait, the higher the chance they’ll find a job they should or will accept. Once they take the job, their overall termination entitlements may be significantly reduced. We have seen situations where once the employee accepts a job offer, the employer pulls their existing offer from the table and offers much less instead. The employee is worse off due to not agreeing to the offer sooner.

Vulnerability to Legal Developments

Developments in the law can also turn what was a reasonable claim into an unreasonable one.

For instance, consider the legal positions taken surrounding COVID-19-related employment disputes. Many employees in non-unionized workplaces were put on leave or terminated due to their refusal to follow vaccine mandates, and they asserted constructive dismissal and wrongful dismissal claims.  Employers often settled these claims as the law was unclear whether such claims in a non-unionized workplace were viable, particularly if they were risk-averse.  The situation has changed significantly since the emergence of two cases in non-unionized workplaces:  (i) in Parmar v Tribe Management Inc., 2022 BCSC 1675, the court ruled that putting employees on unpaid administrative leave for refusing to follow vaccine mandates is not constructive dismissal; and (ii) in Croke v. VuPoint Systems Ltd., 2023 ONSC 1234, the court found that refusal to follow vaccine mandates could amount to the frustration of employment contracts.  As his employment had been frustrated, he was not entitled to any additional damages for wrongful termination.

The assertion of claims is always subject to developments in the law, and consulting with counsel will help to clarify any risks.

Takeaways

Comparatively, employees are not in a good position to play hardball with employers. With fewer resources, lengthy legal disputes and high legal costs pose a greater risk. That being said, here are some key takeaways for employees entering a legal dispute with their employer:

• Employees are obliged to, and many are eager to find a job, which will only reduce the potential of damages awarded. It is important to retain legal counsel early in the dispute to ensure all offers are fair and to act quickly.
• Employment laws are constantly changing, and case law can dictate how the courts act in certain situations. Employees should be aware of their rights and understand how to mitigate the risk of changing laws when this happens.
• Employees do not have to accept the first offer or lowball offers if an employer is trying to bully them. Acting reasonably and standing firm in knowing their entitlements will show both the courts and employers that an employee is open to a reasonable deal.

It is not always an easy balance to strike, as employment disputes are emotional by nature. Therefore, employees should follow their lawyers’ guidance and advice to walk through this emotional and challenging journey to get what they deserve as efficiently as possible.