Ontario Court of Appeal Clarifies the Duty to Mitigate Loss of Employment
A recent decision of the Ontario Court of Appeal, Williamson v. Brandt Tractor Inc., provides useful guidance on how the duty to mitigate loss of employment applies in wrongful dismissal cases. In a succinct ruling, the court confirmed two key principles:
income earned from lower-paying or lower-ranking jobs during the claimed notice period will generally serve to reduce a dismissed employee's damages.
to establish that a former employee has failed in their duty to mitigate, the employer must demonstrate both that:
the individual failed to reasonably look for comparable jobs; and
if such reasonable steps had been taken, the individual would have secured a comparable position.
With respect to the first principle, the Williamson decision pours cold water on the notion that income from inferior employment should not be treated as mitigatory earnings during the claimed notice period. This approach had become common for plaintiff lawyers to advance following an earlier decision of the same court (Brake v. PJ-M2R Restaurant Inc.) which, in its concurring reasons, suggested income from inferior employment may not always constitute mitigation income. For an in-depth discussion of Brake, see our firm’s earlier article on this case.
In Williamson, however, the Court held that there is "no authority" for the proposition that earnings from an inferior position are exempt from consideration as mitigatory earnings. Rather, the governing principle remains the same: all employment income earned during the notice period is generally deductible from wrongful dismissal damages (thus putting the worker in the position they would have been but for the wrongful dismissal, as opposed to providing a potential windfall).
While at first glance, Williamson appears to fully close the door on arguments that income from a lower-paying job should be ignored when calculating damages, special attention must be given to the exact wording of the Court’s decision. It merely reaffirmed that employment income is "generally" deductible, while noting there may be "additional circumstances" where a different result could follow.[1]
With respect to the second principle, Williamson serves as a reminder that employers bear a significant burden when alleging a failure to mitigate. It is not enough to argue, and even prove, that an employee failed to pursue comparable work. The employer must also establish that comparable employment was actually available and that the employee likely would have obtained it had reasonable efforts been made.
The takeaway from Williamson is straightforward: income earned during the notice period will generally reduce wrongful dismissal damages, even where the replacement job is arguably inferior or lower paying. Williamson does not, however, eliminate the mitigation-related exceptions discussed in Brake. The law remains that mitigation income is generally deductible—but not necessarily in every case.
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. To speak with a lawyer, contact us at: 613-238-4430 or info@vwlawyers.ca.
[1] This appears to be a reference to: a) the long-established principle that income received from a second job (or source of earnings) that a worker received concurrent to the position they are dismissed from should not count as mitigating earnings (unless amounts from these sources increase materially post-dismissal); and b) earnings received during the statutory entitlement period are not counted for mitigatory purposes. It remains to be seen whether, in future, the court will expand upon these exceptions to the general treatment of mitigatory earnings.