Over the past three months, as a result of COVID-19, jobs have been lost across Canada at an astonishing rate. While many industries have had to lay-off staff and downsize, others have thrived.
Grocery stores and app-based delivery businesses (such as Uber Etas and Door Dash) have experienced a dramatic increase in business and a corresponding need for new workers. The growth in these sectors presents a potential opportunity for individuals looking to get back to work, even if these roles may perhaps be inferior to, or lower paid than, their former positions.
It is likely the pandemic will prove to be a catalyst for a significant number of wrongful dismissal disputes. In each such dispute, defendant employers will enquire about whether (and how much) the plaintiff earned from other employment, or self-employment, during the period for which severance is sought.
Generally speaking, a plaintiff employee is entitled to be put in “as good a position as he would have been in if there had been proper performance [of the contract] by the defendant” (see: Red Deer College v. Michaels). As such, the defendant employer will receive a credit for monies earned during the claimed notice period (thus applying a dollar-for-dollar deduction to the damages they may otherwise be required to pay).
In a recent decision of the Court of Appeal for Ontario (Brake v. PJ-M2R restaurant Inc.), Justice Feldman suggested that rather than applying a dollar-for-dollar deduction, where a plaintiff is forced to accept an inferior position during the claimed notice period, amounts earned in that position are not mitigation of damages and should not be deducted from the amount the defendant employer must otherwise pay.
This proposal (which was a minority view in Brake) has the potential to provide a wronged plaintiff with a windfall. On the other hand, it may be argued that it helps level the playing field to account for disparities in income (i.e. the legal system gives an unfair advantage to those who can afford to conduct their job search during the notice period without an income as opposed to those that must take a job – no matter how different or poorly paid to their former role).
Justice Feldman’s reasoning has gained traction in Ontario. In several subsequent cases, courts and adjudicators have adopted her approach and declined to consider earnings from inferior roles in assessing mitigation.
With the pandemic presenting an opportunity for recently-fired Ontarians to perhaps earn income in different and potentially inferior roles (such as grocery store cashiers or food delivery drivers), it will be interesting to see how the courts grapple with the tension between the goal of making a wronged plaintiff whole (and no more) and excluding earnings from inferior roles taken out of necessity.
This tension is perhaps best illustrated by two recent (but pre-pandemic) Ontario cases.
In MacKenzie v. 1785863 Ontario Ltd., the plaintiff was wrongfully dismissed from his role as a general manager. During the claimed notice period, he worked first for his wife’s consultancy business and then with a regional tourism organization. In both roles, the plaintiff’s earnings were less than 50% of his former general manager salary. The court, in this case, refused to apply any deduction, noting that:
Mr. MacKenzie was obliged to take positions that were inferior in responsibility and salary after his termination. Accordingly, I find that the income earned should not be deducted from the notice period awarded.
In Dengedza v. Canadian Imperial Bank of Commerce, an unjust dismissal complaint, the adjudicator was similarly presented with a plaintiff who had lost his job (as a senior investigator) and had taken different and arguably inferior work (as an Uber driver). Unlike in MacKenzie, however, the adjudicator was unprepared to follow the approach espoused by Justice Feldman. Instead, he focused on the quantum, rather than the character, of the complainant’s post-dismissal earnings and deducted them accordingly.
Until we receive from clarification from the Court of Appeal with respect to Justice Feldman’s approach, legal counsel and HR professionals should look to incorporate the uncertainty created by these competing approaches when determining how best to respond to wrongful dismissal claims and develop a litigation strategy.
 See: Groves v. UTS Consultants Inc 2019 ONSC 5605 (CanLII) ; Hussey v Bell Canada 2019 CanLII 51848 (CA LA) ; MacKenzie v. 1785863 Ontario Ltd 2018 ONSC 3442; & McLean v Dynacast Ltd 2019 ONSC 7146.
 2019 CarswellNat 3270 (“Dengedza”).
Latest posts by Vey Willetts LLP (see all)
- Masks and the workplace: what Ontario employers need to know - July 15, 2020
- Mitigation of employment in a pandemic - June 15, 2020
- The Maleficent guide to employee mismanagement: lessons for Ontario employers - May 15, 2020