As we have discussed in previous articles, if you are fired from work and decide to seek severance, you are required to take reasonable steps to find alternate comparable employment. This obligation is referred to as the “duty to mitigate” the loss of your employment.
The basic premise underpinning this obligation is that while your former employer must provide you with notice of dismissal, or pay in lieu thereof, you have a corresponding obligation to stem the flow of your losses and become re-employed. Employees cannot elect to simply allow losses to accrue, without the risk that a court will reduce the amount of severance that otherwise would have been owed.
The duty to mitigate does not require perfection. Instead, it requires a dismissed employee to take reasonable steps to look for, and apply to, comparable alternate positions. For example, if an individual is dismissed from her position as a senior manager, she would be required to look for positions of this kind, within her skill set and having a similar level of compensation. She would not, for example, be required to apply for and accept work in an entry level role, making far less income.
In any wrongful dismissal lawsuit, it is the employer’s onus to show that their former employee failed in discharging their duty to mitigate. Generally speaking, this is recognized as a relatively onerous task, and requires that the employer prove that:
The employee did not take reasonable steps to search for comparable employment; and
If she had done so, she could have obtained comparable employment.
Employers are not Required to Subsidize Retraining
In a recent wrongful dismissal action, the Ontario Superior Court concluded that an individual had failed to mitigate his dismissal from employment by deciding to re-train rather than apply for available comparable decisions.
The plaintiff, Benjamin, was fired from his position as a general labourer after 28 years with Cascades Tissue Group Toronto (the “Company”). Benjamin was one of 42 employees let go as part of a broader organizational restructuring.
Benjamin sued for wrongful dismissal, seeking 24 months’ pay in lieu of reasonable notice. The Company, for its part, offered one-on-one coaching and sent a weekly e-newsletter to the dismissed employees, including Benjamin, in which it set out job opportunities at its other locations and with other employers. Among these postings were 3 comparable to Benjamin’s former position, also in the GTA. Benjamin, however, elected to not apply for any of these jobs and instead enrolled in a 6-month welding program in order to upgrade his skills so as to no longer “be at the bottom of the foodchain.”
The Company successfully brought a summary judgment motion to have Benjamin’s action dismissed on the basis that he had failed to reasonably mitigate his loss of employment. In accepting that Benjamin had failed to mitigate the loss of his employment, Justice Glustein made clear that “retraining on its own is not evidence of a failure to reasonably mitigate damages; rather, if an employer can establish that comparable work is available and the employee made a choice to retrain and not to seek comparable employment, retraining would not constitute reasonable mitigation.”
In the instant case, however, the court determined that within a month of his termination, Benjamin chose to not apply for comparable positions, and that the uncontested evidence indicated that such positions were available, and he was likely to obtain comparable employment.
Justice Glustein confirmed that Benjamin was not entitled to charge his retraining to Cascades, when the retraining was to “update my skills from general labour to skilled labour.” As such, Benjamin’s entitlement to wrongful dismissal damages ended when he refused to apply for comparable jobs and instead went back to school.
Lessons for Ontario Employers and Employees
If you are an employee who has recently been dismissed, and are looking to seek additional severance from your former employer, it is important to take reasonable steps to mitigate the loss of your employment or risk eliminating any entitlement you may otherwise have to wrongful dismissal damages. While retraining may be a reasonable step in some circumstances, this case serves as a useful reminder that a wrongful dismissal from employment does not provide individuals with a carte blanche to commence a new career when comparable alternate employment is clearly available.
If you are an employer responding to a wrongful dismissal lawsuit, the above-noted case serves as a useful reminder of the steps that may be taken to assist your former staff while simultaneously reducing your potential liability. In particular, businesses may wish to consider offering support to departing employees, such as career counselling, outplacement services, reference letters and notifications of comparable positions either with their business or elsewhere. If your former employee then fails to take advantage of this assistance, you may be able to prove a failure to mitigate, thus reducing your organization’s liability for wrongful dismissal damages.
If you have been wrongfully dismissed, or are looking to respond to an allegation of wrongful dismissal, please contact us directly to discuss.
Vey Willetts LLP is an Ottawa-based employment and labour law boutique that provides timely and cost-effective legal advice to help employees and employers resolve workplace issues in the National Capital Region and across Ontario.