Active market has renewed the importance of an employee’s duty to mitigate
The availability of comparable employment and the steps taken – or not taken – by an employee to pursue those opportunities can significantly impact a court’s assessment of damages in a wrongful dismissal action.
In a recent case before the British Columbia Supreme Court, Okano v. Cathay Pacific Airways Limited, 2022 BCSC 881, an employee’s decision not to pursue available jobs in the airline industry – where she had spent her entire career – led the court to reduce the amount of wrongful dismissal damages awarded to the employee.
The worker was employed by airline Cathay Pacific in a middle-management position in Vancouver. Her employment was terminated without cause due to the economic impacts of COVID-19 on the employer’s business. At the time of termination, the worker was 61 years old and had been employed by Cathay Pacific for about 35 years.
The airline provided three months’ working notice, during which the worker worked on closing the Vancouver centre. She was offered an additional severance package, but she declined and filed a wrongful dismissal claim against her Cathay Pacific.
Worker disinterested in airline industry
During the working notice period, the worker did not look for work. In the months that followed her last day of employment, her job search activity was limited – described by the court as “passive.” Most notably, there were postings for comparable opportunities with other airlines, including Air Canada and WestJet, which the worker did not pursue. The worker candidly admitted that she did not search for any jobs in the airline industry as she was no longer interested in continuing to work in that industry.
Cathay Pacific argued that the employee failed to mitigate her losses from dismissal – that she failed to take reasonable steps in her own self-interest to maintain her income and position in her field of work. The airline submitted that the court should reduce the worker’s damages on the basis that she could have secured new employment – and replacement income – sooner if she had reasonably pursued the available positions.
Read more: A 73-year-old worker did not have a duty to mitigate her losses from termination due to her age.
The court agreed with the airline and reduced the worker’s notice period by three months. The court found that it was incumbent upon the worker to pursue the available positions in the industry in which she had spent her entire working career. It was unreasonable to decline to do so in the circumstances, said the court.
Because the trial took place before the notice period expired, the court also assessed whether a contingency discount should be applied to the damage award to account for the possibility that the worker might secure new employment before the end of the notice period. The court found that there was a real and substantial possibility that she would find a new job after the hearing, during the balance of the notice period – the evidence showed that there were more than 750 jobs listed as available that were similar in description to the position she held with Cathay Pacific.
Accordingly, a 15-per-cent discount was applied to the damages owing from the date of the hearing to the end of the notice period to account for this possibility.
Leaving industry can be failure to mitigate
While it can be challenging for employers to meet the burden of proving that an employee has failed to mitigate, Okano demonstrates that it is certainly within reach where the employee has declined to pursue the available positions in the employee’s field.
Though not emphasized in this decision, it’s important to highlight that the availability of comparable positions impacts both the assessment of reasonable notice in the first instance, as well as the potential damages that may be awarded to an employee in wrongful dismissal litigation.
The availability of comparable employment has always been one of the Bardal factors used to assess reasonable notice at common law, along with the employee’s age, length of service and their position. Reasonable notice may be, quite reasonably, lower where the employee is well-positioned to quickly secure new employment.
Read more: A terminated employee’s decision to go back to school can reduce damages because the notice entitlement is not intended to fund retraining.
The availability of opportunities may also impact the scope of damages that may be recoverable in litigation, which could reduce the damages on account of an employee’s failure to mitigate or where the employee successfully secures new employment during the notice period. It may also support a contingency discount to account for the possibility of the employee finding work after an early hearing date.
Even though employment opportunities have always factored into the legal analysis, this factor may have renewed importance in the current job market. Employees are in high demand right now in many industries. Employees and employers will need to be aware of how these issues may impact notice periods, as well as the strategy and potential value of a wrongful dismissal claim.
Nicole C.M. Toye is a partner with Harris and Company in Vancouver whose practice focuses on employment law and commercial litigation.
