Job loss almost always comes as a shock. Many people define themselves by their job — when this disappears, it takes part of their identity. Luckily, job loss does not usually mean an immediate loss of income, since most dismissals involve some financial payment (usually referred to as “severance”).
An employee’s obligations while receiving this payment differ depending on the employer’s reason for providing it. By default, the common law requirement of reasonable notice will apply, but that can be displaced by contract. Where contract limits the employee to the requirements set out in the applicable employment statute, such as Termination Pay and Severance Pay under the Ontario Employment Standards Act, 2000, the employee has no further obligation — they simply accept the payment and move on. If the contract provides for more, it may or may not specify how the issue of mitigation will be treated.
Where the employer must provide reasonable notice at common law, the employee must attempt to mitigate their losses resulting from their dismissal by making reasonable efforts to find another job during the notice period. Where the employer can show that the employee did not, the employee’s entitlement to notice may be reduced.
The duty to mitigate remains an evolving area of law. Three recent decisions from the Court of Appeal for Ontario (the “ONCA”) and the Ontario Superior Court of Justice (the “ONSCJ”) provide further insight into the specifics of mitigation.
What type of job is mitigation?
Initially in Lake v La Presse (2018) Inc., the ONSCJ set the employee’s reasonable notice period at eight months. On its review of the employee’s mitigation evidence, it found she had failed to take reasonable steps to mitigate her damages by limiting her applications to senior roles and not applying for roles with lower status or income. To address this failure to mitigate, the Court reduced the employee’s reasonable notice period by two months.
The employee appealed; in Lake v La Presse (2018), the ONCA found that the ONSCJ had overly emphasized the titles of the roles for which the employee had applied and not given enough weight to the actual duties. The ONCA found that the jobs the employee had applied for matched her experience. The ONCA also held that the employee had no obligation to apply for a position with lower status or income — her refusal to do so was not a failure in the duty to mitigate. The ONCA reinstated the employee’s full eight months of notice.
What about returning to your old job?
One method for an employee to mitigate is to return to their previous employer. The Supreme Court of Canada confirmed as much in Evans v. Teamsters Local Union No. 31. In Evans, the Supreme Court of Canada established that an employer may offer employment to a dismissed employee as a means for the employee to mitigate their losses. An employee who refuses this offer will be found to have failed to mitigate their losses unless a reasonable person in the employee’s situation would deem the workplace unsuitable for continued employment, such as where the employee may suffer humiliation or expect poor treatment upon return.
Whether the employment offered is comparable is part of the analysis in applying the rule in Evans. In Miranda v. Respiratory Services Limited, the ONSCJ provided insight into what would not be comparable employment. The employee had worked three eight hour days a week for the majority of her tenure. After a transition in ownership she was placed on “layoff” and told they had no work for her. Several weeks later, the employer contacted her to advise that it had work for her and expected her in the following Wednesday. The employee inquired as to the permanency of the role — and was told she would be called in when there was work. The employee refused the offer and sued.
At trial, the employer attempted to describe this as the employee’s failure to mitigate. The Court held it was not, noting the substantial difference between a guaranteed weekly 24 hours of work and the potential for 8 hours of work per week.
What if you move away?
Does the location of your home impact your ability to find another job, and if so, what impact does this have on the duty to mitigate? In Quesnelle v. Camus Hydronics Ltd., the Court provided some insight on the impact of moving to a remote location.
In Quesnelle, after being constructively dismissed, the employee moved approximately an hour northeast, from Oshawa to Omemee. At trial, the employer showed that Omemee had significantly fewer employment opportunities than Oshawa and as a result, her chances of reemployment were reduced. The employer had also offered the employee his job back, which the employee refused, citing the increased commute resulting from his move.
At trial the Court noted that it was the employee’s decision to live wherever he chose — but that the employment consequences of that decision should not be the employer’s burden. To address this the Court reduced the employee’s reasonable notice by 30%, or three months.
In these cases, the Courts continued to build the roadmap towards an understanding of how to understand the duty to mitigate. In Lake, the ONCA confirmed that an employee is required to apply for a similar job — and is not required to take a loss. In Miranda, the ONSCJ reminded employers about the meaning of ‘comparable’ employment. Finally, in Quesnelle, the ONSCJ clarified the impact of geography on mitigation. An employee may move far away from where the jobs are – but doing so may be found to be a failure in the employee’s duty to mitigate.
These cases are lessons for employer and employee alike; both parties should ensure that they understand their rights and obligations, and how to use them strategically. For example, employers can strategically offer reemployment to a dismissed employee. As always, parties should make informed decisions and not act based on assumptions.