Litigation is rarely the preferred option for employers, but when an employer and a former employee cannot agree on the terms of a severance package, litigation may be inevitable.

As an employer, what can you expect when you’re expecting a wrongful dismissal claim?

Here is a high-level overview of the major steps in wrongful dismissal litigation:

  • Statement of Claim: The former employee’s lawyer will prepare a Statement of Claim, setting out the material facts and the quantum of damages and will “serve” it on you or your lawyer.
  • Statement of Defence: You must respond to the Statement of Claim, setting out your version of the material facts and your position regarding the damage claim.
  • Affidavits of Documents: The parties must exchange sworn affidavits attaching copies of the relevant documents in the claim (e.g. warning letters, emails between the employee and his supervisor, the termination letter, etc.).
  • Examinations for Discovery: The former employee’s lawyer is entitled to conduct an oral examination of a representative of the employer. The questions will relate to the employer’s position on all the relevant issues, including the former employee’s performance, complaints of harassment or the words used in the termination meeting. In turn, the employer’s lawyer may examine the employee.
  • Mediation: This step can happen at any stage of the litigation, including before exchanging relevant documents. Mediation is an informal, confidential and without prejudice settlement meeting between the parties, their lawyers and a mediator. Mediation is mandatory in Toronto, Ottawa and the County of Essex, but optional elsewhere in Ontario.
  • Pre-trial and Trial: The parties must attend a pre-trial with a judge to discuss settlement, schedule deadlines and address any outstanding issues before trial. If the parties are not able to settle at the pre-trial, a trial will be scheduled. At a trial, the lawyers will present opening statements, the parties and their witnesses will be called to give evidence and the judge will issue a decision about liability and damages.

There are a number of other intermediary steps that can be taken in a wrongful dismissal action. It is important to remember is that the parties are entitled to discuss settlement at any time, whether at a mediation or pre-trial or at any prior time.

To a great extent, the general and intermediate steps in a wrongful dismissal matter are out of the employer’s control. However, when an employer anticipates a lawsuit, there are things that an employer can do to uphold, and even improve, its position in the litigation.

What can you do when you are expecting a wrongful dismissal claim?

The key for employers is preservation.

Preserve the memories

Businesses evolve over time: The memories of their employees fade and those employees move to new employers. Taking care to preserve the memories of those employees can be a crucial move by an employer. When you identify a potential claim, ask your key employees, such as supervisors and HR representatives overseeing the former employee, to provide written statements about salient events‎, such as the details discussed in a performance management meeting or accommodation meeting. These statements can be invaluable in piecing together the details of important events long after memories have faded and key witnesses have left their employment. These statements are generally covered by litigation privilege, and so can be used by the employer’s lawyer as a reference but do not have to be produced to the former employee’s lawyer.

Preserve the documents

‎Employers should have comprehensive document retention policies, particularly with respect to electronic documents, such as emails, instant messaging conversations and metadata. It can be prejudicial to your position if you are unable to access documents that are relevant to the action because, for example, your IT department did not save the back-up information from that time period. Handwritten notes and calendar appointments may also be helpful in defending a lawsuit and should be retained. At an absolute minimum, employers should retain documents regarding a termination throughout the two-year limitation period plus an additional six months.

Preserve the status quo‎

While it may be tempting to cut off a former employee’s compensation if he is not willing to accept an employer’s proposed severance package, it may be prudent to continue the employee’s salary and benefits even after litigation commences. In some cases, courts have made significant awards to former employees because their benefit entitlements have been terminated prematurely (consider the example in Brito v. Canac Kitchens, affirmed in part on appeal).

As the saying goes, an ounce of prevention is worth a pound of cure, but when litigation is on the horizon, an ounce of preservation may be the most valuable step you can take.