Employees who are terminated without cause are entitled to reasonable notice or pay in lieu of notice in order to bridge the gap between their termination and their next employment opportunity. One condition to this entitlement is the need for an employee to attempt to “reasonably mitigate” their damages by looking for comparable employment.
In a recent Ontario Superior Court decision, the court examined whether returning to school in order to improve chances of gainful employment can impact the employee’s mitigation requirement.
28 Years’ Experience
The Employee in this case had been working for the Employer for 28 years as an unskilled general labourer. He lost his job when the Employer ceased production functions at the workplace. The Employer provided the Employee with the minimum amount of payment in lieu of notice, equal to eight months’ pay.
The Employee argued he was owed more than the eight months’ pay he had been given. He stated he would not be able to find a job with comparable pay and security without returning to school, and that he“…needed to improve [his]skills after 28 years,” and “brush up from unskilled labour to skilled labour.”
Meanwhile, the Employer argued that pursuing additional training was not reasonable. There were three jobs that were comparable in terms of both work and compensation available to the Employer. The Employer further argued the Employee “could have” been hired for any of them, and was “likely” to be hired for two (“labour pool” and “spare”). As a result, the Employer argued that pay in lieu of notice should not extend beyond the date the first open position was filled.
Duty to Mitigate
The onus (i.e. responsibility) for an employer to demonstrate an employee breached their duty to mitigate was originally set out by the Supreme Court of Canada in Red Deer College v. Michaels. The Superior Court summarized this duty as:
(i) an employee is required to mitigate damages arising from wrongful dismissal;
(ii) the onus is on the employer to establish a failure to mitigate; and
(iii) the onus requires the employer to establish that (a) the employee did not take reasonable steps to seek comparable employment, and (b) if the employee had done so, the employee could have procured such comparable employment.
In this case, the Court found the Employee breached his duty to mitigate by failing to apply for the positions offered by the Employer upon his termination.
In its decision, the Court held the Employee “had comparable positions available that he could have procured. His concerns about hours and security were related to his employment as an unskilled general labourer, a position which remained available to him after termination. Benjamin was not entitled to charge his retraining to Cascades, when the retraining was to “update my skills from general labour to skilled labour”, so that he would no longer be “at the bottom of the food chain”.
What Does This Mean for Employers?
Employers may not be on the hook for a full payment in lieu of notice if the employee fails to pursue opportunities for similar employment after termination. Similarly, payment in lieu of notice may not be due if an employee decides to return to school instead of seeking available employment opportunities.
What Does This Mean for Employees?
Employees should be aware of how their post-termination choices, such as failing to apply for a new position, or going back to school, could impact any pay in lieu of notice due to them.
The employment lawyers at Grosman Gale Fletcher Hopkins LLP have dealt with thousands of severance packages over the course of their 30-year history, assisting both employees and employers. Contact our office if you have found yourself terminated and would like a knowledgeable employment lawyer to review your severance package or if you are an employer and want assistance developing fair severance packages for your workforce. Contact us online or by phone at 416-364-9599.
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