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Limited Scope of Mitigation of Damages in Employment Context

The Facts

In Marques v Delmar, the Ontario Superior Court of Justice makes a few interesting decisions in respect of reasonable notice and the calculation of damages. The plaintiff in this case worked for the defendant as a Director of Housing and Distribution between August 11, 2014, and April 7, 2015, about three months short of a year. On April 7th, the defendant terminated the plaintiff without cause. In lieu of reasonable notice, the plaintiff was offered a lump sum payment totalling the equivalent of four weeks’ base salary, which amounted to $14,230.97. The questions before the court were three part:
  1. generally, the extent to which the reasonable notice provided by common law should be offset by the plaintiff’s ability to secure alternative employment;
  2. whether the plaintiff’s monthly car allowance should have been included in the calculation of his remuneration; and
  3. whether the plaintiff’s bonus payment should have been included in the calculation of damages for wrongful dismissal.
The defendant employer submitted that reasonable notice should not exceed three months because the plaintiff was able to locate employment three-and-a-half months after termination. The length of reasonable notice for each case can vary, and it depends largely on the length of service and employment contract—or lack thereof—as well as a host of other factors such as the length of employment, age of the employee at the time of termination, their job title and the ease with which they can secure a similar position. Different factors can come into play and every situation is determined on a case by case basis. As the judge aptly noted in this case, determining reasonable notice is an art, not a science.

The underlying logic of reasonable notice is to provide financial support for an employee during their search for another job. As such, there is a duty on behalf of an employee to “mitigate” the damages arising from wrongful dismissal by finding another job. Where a person does find another job, the income they earn in their new position will be offset against the damages for wrongful dismissal awarded to the plaintiff. In this case, the employer argued that since the employee found another job within three and a half months, there was no need to give them reasonable notice beyond three months. The judge rejected this argument and awarded the plaintiff pay equivalent to four months’ reasonable notice. Drawing from the Court of Appeal decision in Halland v. Hostopia, the judge found that reasonable notice should be calculated based on the circumstances at the time of termination. While finding another job can mitigate damages, an employee should not be given less reasonable notice because of their success in finding another job.

The judge included a $800 monthly car allowance in the calculation of the employees income but ruled against awarding the bonus because the plaintiff would not have worked for a full year inclusive of reasonable notice.

Our Thoughts

This decision is important as it affirms the courts’ limitation of the scope of mitigation in the employment context. Employees and employers interested in calculating reasonable notice must keep in mind that while employees have a duty to mitigate, such a duty will not affect the length of reasonable notice. This decision and others like it reaffirm the importance for employers and employees of seeking legal advice and drafting contracts that address the needs of every individual or corporation. Being informed of your rights and drafting contracts that reflect everyone’s individual needs allows parties to plan effectively in the event that employment terminates.
 
 The above article is for general information purposes only and does not constitute legal advice. If you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere.