Recent case highlights challenges for employers and employees
While cases involving an employer alleging a worker failed to mitigate after termination are common, actually making the case is both difficult and rare.
However, a recent decision found that an employee did not do enough to secure employment after being dismissed, and this affected the payout from the employer.
The 35-year career of Frances Turcic Okano came to an end in late 2020 after working for Cathay Pacific Airways but because she didn’t look strongly enough for alternate employment in the same industry, as well as a number of other factors, her job search was described by Justice Gary Weatherill as “passive.”
“In my view, it was incumbent upon [Okano] to explore available positions in the very industry in which she had spent her entire working career,” he said.
What is the duty?
For employees, steps must be taken to secure new employment but “the bar set for departing employees to mitigate is pretty low,” says Bill Gale, partner at Grosman Gale Fletcher Hopkins in Toronto.
“You pretty much have to do nothing to look for another job before the court is going to reduce the notice period somewhat, so that part of it’s rare; there aren’t that many cases where the court uses the notice period but in every case, it’s an issue, and the defendant always wants to make it an issue.”
“Reasonable steps” in the job search must be undertaken, says Gale but “reasonable” is dependent on the nature of the circumstances.
“If you were unemployed in a role that is very common, where every company has one or two or more of these types of employees, one would expect that the employee is going to be spending a lot of time reviewing the online openings and putting out applications digitally, etc.”
The duty to mitigate falls squarely in the purview of the departing employee, says Andrew Monkhouse, employment lawyer and founder of Monkhouse Law in Toronto, but they have to take action to succeed.
“When employees are terminated, they have to apply for jobs and it’s important for them to keep track of the job they’ve applied to.”
Those looking to do the bare minimum should be aware courts aren’t going to accept this behaviour, he says.
“An employee isn’t allowed to say, for instance, ‘No employer is ever going to hire me,’ because they don’t know unless they’ve tried so, of course, you can’t count on that.”
On the other hand, “the employer’s obligation is more to not do something to make this worse for the employee,” says Monkhouse.
“If an employer doesn’t transfer a certain license or restricts someone’s license, or for instance if they call up potential new employers and say bad things about the employee that hurts that employee, that’s going to most likely prohibit that employer from using mitigation arguments because they acted to hurt that employee.”
Recordkeeping considerations
In order to prove that mitigation was done, keeping records is also important, according to Gale.
“Some employees’ lawyers like to keep a log of their job search which would include not only the real applications that were made but also networking: the employee called up friends in the business to let them know he’s lost his job and is looking around, and are they aware of anything, just to keep your name out there; the courts look at that as well.”
While employees do not have to confine their job searches to the same industry, it’s a good idea to put in some effort in order to successfully mitigate, says Monkhouse.
“I tend to have people come to me and say they don’t want to work in that same industry anymore. I still say, ‘You should still put in some applications within that; even if 80, 90 per cent of your applications are outside of that, you should put in applications.’”
Someone may say they’ve been terminated from a big-five bank so they’re not going to apply to the other banks because they’re sure they’ve been blackballed by them, he says. But a court would not allow such a statement to hold water because it can’t easily be proved.
Mitigation during COVID
During the pandemic, not much has changed in this area, says Gale, except for the leeway given to employees to secure another position, given the turmoil in some industries.
“There are some cases that have talked about physically increasing the notice period that would otherwise be reasonable, given the employees’ age and length of service and position, etc. and because of the fact that COVID is out there. The courts are taking judicial notice of the fact that there’s less positions out there, that people are being downsized and temporarily laid off, etc., so we expect that it’s going to take longer to find another job. “
But some industries were booming during the pandemic, so that can make a difference, according to Monkhouse.
“If you were in the mask-manufacturing business at the beginning of the pandemic, I imagine it would very hard to convince your employer to terminate you, even if you were doing a very bad job, because they just couldn’t get new people. They were printing masks 24 hours a day.”
Incentivizing employees
Once the employee has been terminated, how can HR help to cover all bases?
“The best way to gain the advantage is if you incentivize the person to get a new job quickly because if they get a new job, they get to keep some of the money from severance; but the employer also gets a benefit where the employer saves 50 per cent of the severance money from the date the person gets a new job,” says Monkhouse.
“Say [for example] you’ll get 20 months’ notice on salary continuance, but if you get a new job, salary continuance stops, and you get 50 per cent lump-sum payout of the remainder. There’s different ways that HR can structure that, understanding that someone might get a new job, and then just requiring that have an effect on the severance pay.”
Read more: Mitigation or procrastination?
HR should also develop a standard template so that each terminated employee easily finds new employment, he says.
“That way, the employee is encouraged to get a new job quickly, rather than encouraged to stay off of work in order to get larger severance from their employer because that’s probably the benefit, but each company can define its own way of doing that.”
