Dismissing an employee shortly before a key milestone can attract close judicial scrutiny. In Shynkarova v 2554318 Ontario Ltd. o/a Tax Mechanic [Shynkarova], the Ontario Superior Court of Justice (“ONSC”) inferred that the timing of the dismissal—nine days before the employee became entitled to an additional week of statutory termination pay—was intended to avoid that obligation. While the ONSC found that the employer’s conduct did not warrant punitive or moral damages, and did not constitute a breach of the Employment Standards Act, 2000 [ESA], it nonetheless relied on this timing to justify a one-month increase to the employee’s common law notice period.

The decision also serves as a reminder to employers that ignoring procedural obligations in the litigation process can carry consequences that far exceed the value of an employee’s underlying claim. In this case, the employer failed to meaningfully defend against the employee’s claim or comply with court directions. As a result, the ONSC ordered the employer to pay substantial indemnity costs of approximately $32,000—an amount exceeding the actual damages award.

Background

The employee worked as a social media manager for the employer, an online tax consultancy. In February 2023, just nine days before her one-year work anniversary, the employer terminated her employment. As a result, the employee narrowly missed the one-year threshold under the ESA that would have entitled her to an additional week of statutory notice.

The employee commenced a wrongful dismissal action in May 2023. The employer failed to deliver a statement of defence and was noted in default. Subsequently, the employer requested a case conference; however, no one appeared on the employer’s behalf at the conference. Instead, the employer’s principal advised the court registrar that he was “busy in a business meeting” at the scheduled time.

Following the case conference, the ONSC directed the employer to bring a motion to set aside the default and to seek leave for the principal to act on the employer’s behalf within a specified timeframe. The ONSC also expressly warned that failure to do so could result in the employer being precluded from raising any defence. Despite this direction and warning, the employer took no steps to defend the claim.

With the employer remaining in default, the matter proceeded by way of a default judgment trial, in which the court treated the employee’s pleadings/version of events as uncontested/admitted. At the outset of the trial, the principal sought an adjournment, again claiming that he had been “too busy” to follow the court’s directions.

Decision

Timing of Dismissal

The ONSC initially found that a notice period of three months was appropriate, taking into account the employee’s young age, relatively short service, and the nature of her role. However, the court then considered whether the employer’s conduct warranted an increase.

While the ONSC declined to award punitive or moral damages and found no technical breach of the ESA, it inferred that the timing of the dismissal was a “calculated measure” by the employer to avoid paying the additional week of statutory notice. The court found that this conduct likely demoralized the employee and impeded her job search by “at least a few weeks”.

In combination with the employer’s decision to withhold nearly $4,000 in wages, the ONSC concluded that the employee’s ability to secure new employment was delayed by at least one month. On that basis, the court increased the notice period to four months.

Employer’s Litigation Conduct

The ONSC declined to grant the adjournment requested by the principal, who was not granted leave to represent the employer in place of counsel. The court further stated that an adjournment would be “profoundly unfair” to the employee, who was forced into a more prolonged, expensive process as a result of the employer’s approach to the litigation.

That same conduct also informed the court’s decision to award substantial indemnity costs of more than $32,000—an amount exceeding the damages award. The ONSC noted that while the employer may have “saved money” by not retaining counsel, it did so at the employee’s expense.

Takeaways for Employers

The Shynkarova decision illustrates how both termination timing and litigation strategy can materially affect an employer’s exposure. Employers should keep the following takeaways in mind:

Treat Litigation Obligations as Business-Critical

As Shynkarova makes clear, “too busy” is not a litigation strategy. Failure to defend a claim, comply with court directions, or meet procedural deadlines can significantly increase liability and result in disproportionate costs awards. Litigation obligations should therefore be treated as business-critical, and addressed early—ideally with the help of experienced counsel. Proactive legal advice is often the difference between a contained termination and a costly mess.

Be Sensitive to Termination Conduct and Timing

The timing of terminations can attract close scrutiny by the courts, particularly where it is paired with other problematic conduct (for example, withholding earned wages). If such timing suggests an attempt to sidestep impending statutory entitlements, a court may infer bad-faith conduct and factor that into the overall assessment of notice or dismissal-related damages. Where a termination near a milestone (or holiday or other date of personal significance to the employee) is genuinely necessary, employers should ensure the decision-making is well-documented.

Impact on Assessment of Wrongful Dismissal Damages

The Supreme Court of Canada previously rejected the practice of increasing notice periods to account for an employer’s bad-faith conduct at termination (for more information, see our blog here). Instead, it held that harm arising from the manner of dismissal must be compensated under a separate head of damages, based on proven loss, rather than through an “arbitrary extension of the notice period”. This framework brought greater predictability to wrongful dismissal awards by anchoring notice to specific factors and, to some degree, raising the evidentiary threshold for moral damages. Against that backdrop, Shynkarova is notable because the ONSC declined to award moral or punitive damages, yet still increased the common law notice period based on the employer’s termination conduct—effectively reviving some of the uncertainty Honda sought to eliminate.

This blog is provided as an information service and summary of workplace legal issues.

This information is not intended as legal advice.