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Failure to mitigate damages leads to a reduction in termination notice

The Supreme Court of British Columbia confirmed that following the termination of a senior employee who had over 20 years of service with the employer, the employee was entitled to a reasonable notice period of 17 months considering the Bardal factors. However, due to the employee’s extremely passive attitude towards finding new employment, the notice period was reduced to 14 months. In a nutshell, the employee just did not do enough to seek alternate employment.

What happened?

This long-term employee was 59 years old and worked as a senior financial services manager in a company that sold cars to the public. His duties included selling cars, and, after any sale was made in the company, the client was directed to the employee’s office to complete the necessary papers and conclude the transaction. The employee also offered customers automobile appearance protection packages and a variety of leasing, insurance, warranty and financing options for their new cars.

The employee was compensated via commission payments based on selling options and packages. He was a loyal employee. The employee required emergency eye surgery in July 2013, and had other more minor eye surgery following this, but other than that he was recovered.

Also in July 2013, the employee was terminated. It came as a surprise to the employee given that there were no warnings whatsoever. He did not sign any releases so he did not receive any payments from the employer on his termination.

When he departed, he was not offered, and he also did not request, a letter of reference.

Interestingly, the employee did not have a resume and he did not prepare one after the termination. In fact, within the next year, the employee finally put together a resume but had only applied to three or four positions providing comparable work.

During the employee’s wrongful dismissal action, he applied for some more positions; altogether, the employee had applied for seven positions (two during the same month as the hearing).

When addressing the issue of mitigation at the hearing, the employee stated that he checked the local newspaper for jobs, more or less daily, and subscribed to LinkedIn, which he also checked regularly. He attended one job interview. Also, he spoke with a couple of people a few times that were involved in the retail car industry, all to no avail.

The employer argued that the employee failed to mitigate his loss. In fact, the employer was able to show that there were other car dealerships in the area that had employed people since the termination – there had been four openings in the last year. The employer was also able to point to a number of dealerships in the area, some of which could have been hiring, but the employee never made any inquiries. Rather, the employee did not contact any of those dealerships except for maybe one or two.

The court agreed that the employee was entitled to reasonable notice and considered the traditional Bardal factors when awarding 17 months of reasonable notice.

However, the court had to take into consideration the mitigation argument.

The court noted that, if an employer did not lead evidence of actual alternative job offers, it remained open to the employer to lead evidence that had the plaintiff taken reasonable steps to mitigate he would have been likely to obtain comparable alternative employment.

That said, there had to be evidence that there were positions open within the industry that would bear investigation.

The court hammered home the point that the duty to mitigate involved a constant and assiduous application for alternative employment, an exploration of what was available through all means.

When assessing the employee’s attempts to mitigate, the court had to weigh the likelihood that those attempts would have led to comparable alternative employment.

In this case, the court concluded that the employee did not do enough to find new work. The court acknowledged that it was not an easy thing to do, especially after so many years of being employed. However, it was necessary to act reasonably to secure new work if it was available.

Here, it was impossible for the employee to know what the job market held for him when he did not do enough to learn what the prospects really were. The employee never consulted job counselor or a job-search company. He never applied to the open positions. He never spoke to people in the industry, even though the word-of-mouth and personal links appeared very important in this industry.

Consequently, there was a failure to mitigate in this case, and this reduced the notice period from 17 months to 14 months.

What is the lesson here?

When employers find themselves in this position, it is important to lead evidence of actual alternative job offers, and alternatively lead evidence that, had the employee taken reasonable steps to mitigate, the employee would have been likely to obtain comparable alternative employment. It is important to remember that employers should have evidence that there were positions open in the industry that would prompt employee to investigate the opportunity.

Employees are expected to constantly explore what is available following a termination; if an employer believes that the employee has failed to do this, it may be worth raising this argument so it can be considered during a wrongful dismissal action during the calculation of a reasonable notice period.

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Christina Catenacci

Christina Catenacci, BA, LLB, LLM, was called to the Ontario Bar in 2002 and has since been a member of the Ontario Bar Association. Christina worked as an editor with First Reference between February 2005 and August 2015, working on publications including The Human Resources Advisor (Ontario, Western and Atlantic editions), HRinfodesk discussing topics in Labour and Employment Law. Christina has decided to pursue a PhD at the University of Western Ontario beginning in the fall of 2015. Read more
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