'The employee doesn't have the obligation to mitigate their losses by taking lower-paying jobs'
The Ontario Court of Appeal has overturned a reduction in a fired worker’s notice period for a failure to mitigate her damages from termination.
In disagreeing with the original decision, the appeal court confirmed a couple of key elements in assessing the efforts of terminated employees finding new work, according to Paulette Haynes, founder and managing officer at Haynes Law Firm in Toronto.
“[A terminated] employee has the duty to mitigate their losses from termination, but if an employer wants to challenge [the worker’s] efforts to mitigate, there's a two-part test,” says Haynes. “One is it's incumbent on the employer to prove that the [worker] failed to take reasonable steps to mitigate.”
“Point two, the analysis is, had the dismissed employee taken those reasonable steps, [whether] they would have likely obtained comparable employment.”
Slow start to job search
The worker was hired by Montreal-based daily online French-language newspaper La Presse in 2013 to be general manager of its Toronto sales division. The worker was the most senior employee in Toronto.
In March 2019, the company decided to close the Toronto office and outsource its work. It provided the worker with two months’ notice of termination, effective May 30. The worker tried to negotiate the terms of her departure, but she was unable to reach an agreement. Her last day of work was April 30.
The worker sued for wrongful dismissal, claiming 12 months’ pay in lieu of notice. She was 52 years old at the time of her termination.
The worker started her job search in June with career counselling services provided by La Presse and checking online job boards almost daily. She applied for 20 jobs starting in September, including nine with vice-president titles that were technically more senior than her role with La Presse but matched her experience and qualifications.
However, the worker was unable to find a new job for two years after her termination.
A motion judge determined that the worker was entitled to eight months’ reasonable notice, based on her age, her role, and five-and-a-half years of service.
However, the judge found that the worker aimed too high, as most of the positions for which she applied were of a higher rank. The judge believed that if the worker had searched more broadly, she probably would have found more positions available – although the court acknowledged that there was “no direct evidence in front of me of other positions that the [worker] could have applied for,” it said that it was “reasonable to assume that they existed.”
The judge noted that it was reasonable for the worker to take about a month to adjust to her dismissal, but she took closer to two months after her final day of work to start looking for work. In addition, she didn’t apply for a job until September 2019, more than four months after her last day with La Presse, said the judge.
An employment lawyer discusses employees’ legal obligations after termination without cause.
Deduction for failure to mitigate
The motion judge deducted two months from the notice award for the worker’s failure to mitigate her losses, ordering La Presse to pay the worker damages equal to six months’ pay, bonus, and benefits.
The worker appealed the notice period deduction, arguing that it was an error to conclude that she waited too long to begin her job search, she should have applied for lesser-paying jobs, and she aimed for positions that were too high.
The Court of Appeal noted that the duty to mitigate is based on the concept that the employer shouldn’t be responsible for losses that a dismissed worker could reasonably have avoided, but the onus was on the employer to provide proof that the employee made a reasonable effort to avoid those losses.
The appeal court found that the evidence was clear that the worker did not start looking for work until June 2019, more than a month after her last day with La Presse. Based on this evidence, it was open to the motion judge to conclude that the worker did little to look for work before then, said the court.
However, the appeal court agreed with the worker that the motion judge erred when it came to determining comparable employment.
Ontario courts have shown a mixed approach to mitigation for fixed-term employees.
Comparable employment
The court noted that a terminated employee has an obligation to mitigate their losses by seeking comparable employment, “which typically is employment that is comparable in status, hours and remuneration to the position held at the time of dismissal.” The worker had no obligation to look for lower-paying jobs, said the court.
The court found that the worker provided substantial evidence that she applied for jobs that were appropriate for her experience and skill. Although some of the positions had more senior titles, the worker’s evidence indicated they were similar to her La Presse position. The motion judge erred in placing too much emphasis on the job titles in finding that the worker aimed too high, said the court.
“The [worker] made it clear that she applied to positions that matched her work experience and qualifications rather than focusing on job titles, and it's interesting because what the motion judge did is the reverse,” says Haynes. “The [worker] said, basically, that just because you have a title that says ‘vice-president,’ it doesn't necessarily follow that the duties are commensurate with that.”
The appeal court noted that La Presse didn’t provide any evidence that the vice-president positions to which the worker applied were too senior – pointing out again that the onus was on the employer to prove that the worker failed to mitigate.
“The employee does not have to apply for and accept any and all positions – what [they are] required to do is apply for jobs which are comparable to that from which they were terminated,” says Haynes. “And we have case law that speaks to the types of factors that courts should look at for determining what is ‘comparable employment’ and the Court of Appeal referred to those factors – status, the hours, the remuneration – and the employee doesn't have the obligation to mitigate their losses by taking or seeking out lower-paying jobs.”
Evidence lacking
As for the motion judge’s determination that, had the worker expanded her job search to include lesser paying jobs she would have found work, the appeal court also disagreed. The mitigation test required a finding that, if reasonable steps were taken, the worker would likely have found a comparable position, but there was no evidence that the worker would have found comparable employment with reasonable and appropriate steps, said the court.
In fact, the motion judge specifically stated that there was no direct evidence of other positions that were available during the notice period, the appeal court said.
“The Court of Appeal reiterated, at different points of the decision, that there was no evidence to support the inference that if the [worker] had applied for other positions, she would have found comparable employment – that conclusion was simply not available on the record,” says Haynes. “A big issue in this case was that, essentially, the employer didn't live up to its burden of proof.”
The advanced age of a B.C. worker helped lengthen his notice entitlement, but his lack of mitigation reduced it, the BC Supreme Court ruled.
The court allowed the worker’s appeal, finding that the motion judge’s determination that the worker failed to mitigate was erroneous. The court overturned the two-month deduction of the notice period and ordered La Presse to pay the worker eight months’ pay in lieu of notice.
Haynes reiterates that the main problem for the employer was that it didn’t produce any evidence to counter the worker’s argument that opportunities in the industry were limited and her job search was reasonable – even the motion judge’s decision on mitigation was based on inference and speculation.
“If employers want to put themselves in a stronger position to meet the burden in satisfying that mitigation analysis, they should put together the information, especially within that reasonable notice period, with respect to, are there suitable positions [and] comparable positions that the employee could have applied for,” says Haynes. “Whether you save them digitally or do it old-school, amass that evidence, hard copy or soft copy, to show, ‘Here's what the employee could have applied for in terms of comparable positions.’”
And if an employer is on the lookout for mitigation opportunities, it could reduce the notice entitlement anyway if it helps the employee find new work sooner, adds Haynes.
“La Presse did offer outplacement services and we know from the evidence that [the worker] used them, so that's another thing that employers can do is offer outplacement counselling,” she says. “And if it's appropriate, they might even share possible job opportunities that are available.”
See Lake v. La Presse, 2022 ONCA 742.
