In a recent Ontario employment dispute, the court applied the legal principle of “duty to mitigate” in wrongful dismissal cases, which reduced the employee’s compensation for termination (or severance package).
What is an Employee’s Duty to Mitigate in Wrongful Dismissal Cases in Ontario?
As a basic employment law principle, employees whose jobs are terminated employees have a legal requirement to mitigate (or take steps to reduce) the income loss resulting from the wrongful dismissal (or constructive dismissal), especially by seeking comparable employment. The term “comparable employment” does not mean the same job as before, nor does it mean an inferior (or any) job whatsoever. Rather, in a wrongful dismissal claim, an employee is required to actively search for, apply for, and accept a job that is comparable to their previous job in terms of:
- job title (or status)
- duties and responsibilities
- compensation
- work location
- hours of work and schedule
Where an employee has failed to mitigate their wrongful dismissal damages, an employer may be able to justify providing the employee with reduced compensation (or severance package). However, the burden of proof is on an employer to prove the employee failed to mitigate by taking reasonable steps or accepting a reasonable offer from the existing employer or a new employer. In order to meet this high standard, courts have often criticized employers for arguing an employee has failed to mitigate while taking no steps to assist the employee’s re-employment efforts, such as by providing career counselling services, relevant job leads, or a reference letter. As such, generally speaking, it is very difficult to prove an employee has failed in their obligation.
A recent decision in an Ontario wrongful dismissal case provides guidance on when courts will find that employees have failed to mitigate their damages.
Gannon v. Kinsdale Carriers
In Gannon v Kinsdale Carriers, 2024 ONSC 1060, the Ontario found that a terminated employee failed to mitigate by refusing to accept an offer of comparable employment, disentitling her to damages for reasonable notice (or a full severance package). In particular, the court found that the employer was able to demonstrate that a position was available and the employee was unreasonable in pursuing or accepting it.
Background
The employer was a trucking company who terminated the employee’s job as a result of the company’s permanent closure. At the time of her wrongful termination, she was 57-years-old and had worked for the company for over 22 years as an accounts receivable/dispatcher/office clerk. Following her dismissal, the employee brought an action for wrongful dismissal, seeking a 22 month notice period.
The Decision
The Court found that the employee was not entitled to damages for reasonable notice. Most importantly, it concluded that she failed to mitigate her damages by rejecting an offer of comparable employment the employer extended to her on December 29, 2020, for a position she could have started in early January 2021.
The Employee Failed to Mitigate Wrongful Dismissal Damages
The court emphasize the rule that the wrongful dismissal damages an employee is entitled to may be reduced where the employer can prove that the employee did not take reasonable steps to mitigate their losses by seeking comparable employment. This involves a two-part test for an employer to prove that the employee failed:
1) to take reasonable steps to search for a job,
2) that a comparable job could have been found if the employee had taken reasonable steps.
In arguing the employee failed to mitigate her wrongful dismissal damages, the employer pointed out that after it gave her notice of termination on December 16, 2020, it made every effort to assist her in obtaining comparable work as soon as possible by calling on various industry contacts. In particular, it reached out to another transporter, Zehr Transport Limited, and recommended they hire the employee for a new job on the same hourly wage and work schedule that she previously held.
As a result, Zehr Transport Limited arranged a job interview with the employee. The employer argued that, during that interview, she was verbally offered the same position that she held at Kinsdale, with similar duties and responsibilities.
However, the employee argued that Zehr Transport Limited never made such a job offer to her, or that if an offer was made, it did not constitute comparable employment because the position was for a full-time dispatcher, which did not include administrative and other office duties that she carried out at her previous job with Kinsdale.
Ultimately, the Court found that did receive a job offer in the position of dispatcher by Zehr, with ancillary office administration duties, similar to her old position at Kinsdale. Her salary and hours of work would have also remained the same. This opportunity constituted comparable employment, which the employee could have accepted to properly mitigate her damages.
Takeaways for Employers
While this case demonstrates that employers may be able to prove an failed to mitigate in wrongful dismissal cases, it is important to keep in mind that it is rare for employers to be able to do so successful in employment disputes. Generally, the courts have found that it will be necessary for an employer to present evidence that a comparable job could have been found by a wrongfully dismissed employee. In this specific case, the evidence the employer presented to support its position was compelling, with witnesses from the prospective new employer’s job interview confirming that they extended a comparable job opportunity to the employee.
While it may not always be possible for employers to use contacts in their networks (e.g., competitor companies) to arrange a new job or even a job interview for a wrongfully dismissed employee, they can still try and maintain a sound failure to mitigate argument by providing letter of reference, career transition services, doing research, sending out relevant job leads, and reaching out to industry contacts to inquire about comparable positions or obtaining information about available jobs in the market from an outplacement counsellor or recruiter. Doing so, an employer may be able to lead evidence that these jobs were brought to the employee’s attention and if the employee did not pursue them, use that evidence to show that the employee was not diligent in searching for comparable employment.
Call an Ontario Wrongful Dismissal Claim Lawyer
If you are an employee in Ontario who believes you have a wrongful dismissal claim (or a constructive dismissal claim), please contact our Toronto wrongful dismissal claim lawyer to arrange a confidential consultation to review and better understand your employee rights and options, including pursuing a human rights claim while you negotiate your severance package. We are here to protect your employee rights and best interests. With our detailed employment contract review with an Ontario employment lawyer, you can invest in your future by protecting your rights if you are ever terminated from your employment, including to ensure you receive a fair severance package, deal with a wrongful dismissal claims or constructive dismissal claims.