Malicious Prosecution — Ontario Employment Law

In Ontario employment law, a claim of malicious prosecution arises when an employer wrongfully orchestrates criminal proceedings against a worker, driven by malice rather than a genuine belief that a crime occurred. While companies sometimes contact authorities when they suspect workplace theft, fraud, or violence, making a mistaken accusation is not enough to establish this civil tort. Even if the worker is ultimately cleared of all charges, the threshold to hold the employer liable is exceptionally high.

To succeed in a civil lawsuit for malicious prosecution in Ontario, an employee must prove four distinct elements. First, the employer must have initiated or actively continued the criminal proceedings. Second, the proceedings must have terminated in the employee's favour, such as through an acquittal or the Crown withdrawing the charges. Third, the employer must have acted without reasonable and probable cause. Finally, the employee must prove the employer was motivated by malice—which means they had a primary purpose other than carrying the law into effect, such as trying to fabricate "just cause" to avoid paying severance under the Employment Standards Act, 2000 (ESA).

A major hurdle in these cases is the role of law enforcement. If an employer simply reports suspicious activity to the police, and the police then conduct their own independent investigation and decide to lay charges, Ontario courts generally find that the employer did not "initiate" the prosecution. For a claim to survive, there usually needs to be evidence that the employer subverted the police investigation, perhaps by providing fabricated evidence or withholding crucial exculpatory information.

The situation is even more strictly regulated for unionized employees. Because of the distinct boundaries between civil courts and labour arbitration regimes, a unionized worker attempting to sue their employer for malicious prosecution must often navigate complex jurisdictional challenges. Courts will examine whether the core of the dispute fundamentally connects to the workplace and the collective agreement, which might preclude a civil lawsuit entirely.

Because navigating the intersection of criminal charges, civil torts, and potential wrongful dismissal involves a rigorous legal threshold, workers should ensure they have a professional review the exact sequence of events before launching a claim.