When an employee commences a claim against their employer, or vice-versa, the proper forum in which to bring the lawsuit is an important consideration. For civil claims, this is typically determined by the type of relief sought and the value of the damages being claimed.
In Ontario, the Small Claims Court has jurisdiction in any action for the payment of money or for the recovery of possession of personal property where the amount claimed does not exceed an amount prescribed by regulation. Currently, this limit is set at $35,000.00. Claims above this amount are brought to the Ontario Superior Court of Justice following one of two procedures: the simplified procedure, if the amount sought is $200,000.00 or less (or all parties otherwise agree to this procedure), or the ordinary procedure.
As we’ve written about previously, there can be significant cost consequences if a plaintiff chooses the wrong forum to pursue their action. For example, the Rules of Civil Procedure provide a court with the discretion to not order any cost recovery for a plaintiff, even if they were successful, where the plaintiff’s damages are within the monetary jurisdiction of the Small Claims Court but they instead chose to proceed in the Ontario Superior Court of Justice.
What is Changing?
As of October 1, 2025, the monetary limit on claims to be brought in the Small Claims Court will increase from $35,000.00 to $50,000.00. In most cases the maximum costs recovery in Small Claims Court is 15% of the amount claimed. As a result, the maximum costs award in the Small Claims Court will also increase to $7,500.00 as of October 1, 2025.
What is the Impact?
This increase means that more employment law matters, including wrongful dismissal claims, will fall within the jurisdiction of the Small Claims Court. Plaintiffs whose claims are close to the new threshold will need to carefully consider whether they still want to pursue their matter in the Ontario Superior Court of Justice, given the potential cost consequences if their ultimate award falls within the $50,000.00 jurisdiction of the Small Claims Court.
Like any forum, there are pros and cons to the Small Claims Court. The process is subject to its own rules and procedures which are more streamlined than those under the Rules of Civil Procedure. For example, there is no discovery process and no mandatory mediation, although the parties are required to meet in a settlement conference before trial. This theoretically means parties should be able have their claims determined faster, in a more cost effective manner, although a substantial backlog since the pandemic has continued to lead to long delays. In addition, damage awards and cost recovery is capped, as noted above.
Key Takeaways
Choosing the proper forum for a lawsuit is an important decision. Plaintiffs will need to have a reasonable assessment of their potential recovery and keep in mind the increased jurisdiction of the Small Claims Court when choosing how to proceed. In addition, defendants should expect more claims to be pursued in this forum.
If you are an employee that wishes to bring a lawsuit, we can work with you to decide the best way to bring your case and move it forward.
If you are an employer that has been sued by a former employee, we can help you defend the case in a strategic and efficient manner. If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.
