Following termination, employees have a duty to attempt to secure alternative employment in order to mitigate the losses they face. This duty can raise a whole host of issues and questions, such as when the employee needs to start searching for jobs, how hard they need to try to secure alternate employment and which types of positions they need to apply for.
This article focuses on the latter issue and looks specifically at whether employees need to apply for lower-paying positions than the one held prior to termination. This post also looks at a recent decision of the Court of Appeal for Ontario in which a past employer claimed that the employee should have applied for a broader range of positions.
What does an employee need to do to comply with the duty to mitigate?
After a wrongful dismissal or constructive dismissal, employees have a duty to mitigate their losses. This idea is based on the premise that the employer should not be responsible for losses that the employee could reasonably have avoided.
However, in a claim for damages following termination, the onus falls on the employer to establish that the employee has failed to mitigate their losses. If the employer succeeds in proving this, the employee’s damages, such as for the reasonable notice period, are likely to be reduced.
Unfortunately for employers, the burden of proving a failure to mitigate has been described by the Supreme Court of Canada as “by no means a light one”.
Firstly, the employer needs to prove that the employee failed to take reasonable steps to mitigate their losses. Secondly, the employer needs to show that had the employee taken reasonable steps, they would likely have obtained alternate employment.
Employee laid off after closure of Toronto office
In Lake v La Presse, the plaintiff employee worked for an online French-language newspaper. She was the general manager of a division of the defendant employer based in Toronto, and at the time of her termination without cause, she earned $185,000 per year plus benefits.
She was responsible for eight staff and reported to the Vice-President of Sales and Operations in Montreal. Her division obtained advertising revenue, and the employee managed the sales team.
The employer made the decision to close the Toronto office and informed the plaintiff in March 2019 that her employment would end on May 30. She stopped working on April 30 after negotiations on the terms of her termination broke down.
She sued for wrongful dismissal and remained unemployed after two years.
Employee sought career coaching and applied for many jobs
The motion judge decided that a notice period of eight months was reasonable in the circumstances.
Turning to mitigation, the judge concluded that the employee did little to search for work in May 2019. The employee produced a chart of her job search efforts which began in June. She participated in career transition services provided by the defendant. She then paid for a career coach.
The year after the termination, the plaintiff applied for eleven jobs, nine of which were vice president roles.
Motion judge found employee failed to take reasonable steps to mitigate damages
The motion judge decided that the employee failed to take reasonable steps to mitigate her losses for three reasons. The judge explained that she waited too long to start her search, opining that she should have been ready to go on May 1, and that she waited for too long to apply for any jobs and then applied to “very few” jobs.
Finally, the judge said:
“She aimed too high. There is nothing wrong with her having applied for vice president roles, but she should have been applying for less senior roles as well, as general manager, and eventually as a sales representative if she continued to remain unemployed”.
The motion judge concluded by inferring that if the plaintiff had expanded her search, began her search earlier and applied for more jobs, her chances would have improved. As a result, the judge deducted two months from the plaintiff’s notice period. The employee appealed.
Court of Appeal agreed with employee that there was no obligation to apply for lower-paying work
The Court of Appeal accepted the plaintiff’s submission that she was not required to search for lesser-paying jobs, after a period of attempting to find similar employment. It explained that employees need only:
“seek “comparable employment”, which typically is comparable in status, hours and remuneration to the position held at the time of dismissal.”
As a result, the Court found that the plaintiff need not search for lower-paying work, such as sales representative jobs.
The Court of Appeal also agreed with the employee’s argument that she had not aimed too high by applying for vice president positions. It found that she applied for positions matching her skills and qualifications and that the motion judge focused too much on job titles. As a result, it accepted that the plaintiff took reasonable steps to mitigate her damages.
No reduction for failure to mitigate
The Court of Appeal also rejected the inference drawn by the motion judge, explaining that there was no evidence to support a conclusion that comparable employment would likely have been found had she applied for other positions.
The Court of Appeal decided that there was no failure to mitigate and hence no deduction to the reasonable notice period.
Contact Grosman Gale Fletcher Hopkins LLP in Toronto for Advice on Mitigation Following a Termination
The employment lawyers at Grosman Gale Fletcher Hopkins LLP have helped both employers and employees with issues that arise after termination, including questions relating to whether employees have satisfied the duty to mitigate their damages.
We are a highly recommended labour and employment law firm in Canada. If you require advice on an employment law issue, contact our firm online or at 416.364.9599 to schedule a consultation.
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