Canadian Employment Law Today

Mitigating the costs of wrongful dismissals Wrongfully dismissed employees are entitled to damages in lieu of notice, but they have obligations too BY ALEX KOWAL A sometimes overlooked, but vitally important, aspect of a wrongful dismissal claim is the terminated employee's duty to mitigate. Un - derstanding the duty to mitigate — a termi- nated employee's obligation to take positive steps to reduce the damages arising from their termination — is obviously important for both employees and employers, espe - cially given the law can sometimes appear unsettled on issues related to mitigation. e leading case on the duty to mitigate in wrongful dismissal cases is the 1975 Su - preme Court of Canada decision Michaels v. Red Deer College. Chief Justice Laskin in Michaels held that: • An employee is required to mitigate dam - ages arising from wrongful dismissal • e onus is on the employer to establish a failure to mitigate • e onus requires the employer to estab - lish that (a) the employee did not take rea- sonable steps to seek comparable employ- ment, and (b) if the employee had done so, the employee could have procured such comparable employment. e first two parts of the test are straight- forward — there is an employee obligation and the burden of proof rests with the em- ployer. However, the third part seems to give rise to a few corollary issues, which have re- cently been addressed — albeit sometimes inconsistently — by our courts. e first issue is the distinction made be- tween "should have" and "could have" pro- cured comparable employment. ere are a number of cases where the "should have" standard was applied — Fisher v. Hirtz, Yiu v. Canac Kitchens Ltd., and, most recently, Jonasson v. Nexen. is is the incorrect standard, which was clarified in Benjamin v. Cascades Canada ULC with reference to Cipman v. Kolumbia Inn Daycare Soci - ety, and the plain language used by Justice Laskin in Michaels: "I agree that there are differences be- tween establishing a 'could have' onus compared to a 'would likely have.' For the reasons that follow, however, I find that the Michaels test sets out a 'could have' onus and it is the proper approach to follow… While the onus is on the defendant to prove the plaintiff has not mitigated, it would be impossible for any employer to prove that the employee would have been able to se - cure a particular job." e next question that often arises is how far an employee must go to seek alternative employment and who is responsible for the ancillary expenses related to attempting to mitigate. ree of those issues have been recently addressed by our courts: • Does pursuing retraining instead of em - ployment constitute a failure to mitigate? • Are employers responsible for the costs an employee incurs in attempting to mitigate? • Are earnings from a lower position than previously held mitigation income? Retraining as reasonable mitigation e general proposition here is that the decision by a terminated employee to seek retraining is not, on its own, a failure to mitigate. As addressed in the Cascades decision, seeking retraining is only a fail- ure to mitigate when the employer can show the employee (a) chose to retrain instead of seeking comparable positions; and (b) could have procured that compa- rable employment. Put succinctly by the court in Cascades: "…a dismissed employee ought not to have a 'free pass' to change careers to enhance job security or obtain better hours, and then collect damages for no - tice simply because of dismissal. In those circumstances, an employer should not be required to fund training (through payment of reasonable notice) when the employee could have obtained compa - rable employment." In Cascades, the employee, less than one month into his reasonable notice period, chose not to apply for comparable positions with his prior employment as an unskilled labourer (which the employer proved to ex- ist) and instead chose to seek retraining as a welder to become a skilled worker so he could control his own hours. Contrast that with decisions where retraining was found to have been reasonable — such as when an employee made considerable attempts over a significant period of time to find compa - rable work and eventually sought retraining (Kinsey v. SPX Canada Inc.), or an employer was unable to establish the availability of similar work (since they had the entire mar - ket covered in the area) and the employee sought retraining (Williamson v. Ritz Lu- theran Villa) — and the distinction is clear. If an employee makes bona fide attempts to secure comparable employment or the em- ployer cannot prove comparable employ- ment exists in the marketplace, retraining may not constitute a failure to mitigate. Mitigation expenses It is clear that an employee must take ac- tive steps to mitigate her damages, but can an employer be responsible for the expenses an employee incurs in miti- gating? is question was recently an- swered by the Court in Robinson v. H.J. Heinz Company of Canada LP. Prior to her constructive dismissal, the employee was induced to move from southwestern Ontario to Toronto. Following her ter- mination, she accepted a lower-paying position in southwestern Ontario and was required to sell her home in Toron- to as part of that relocation. While dis- missed employees don't ordinarily have the right to claim damages arising from lifestyle choices like moving to a differ- ent city, in this case the court noted that it was reasonably foreseeable that if the employer terminated this particular em- ployee (given her prior residence), her damages would include the cost of relo- 4 Canadian HR Reporter, a Thomson Reuters business 2019 CASE IN POINT: WRONGFUL DISMISSAL OFTEN EMPLOYEES believe upon termination they are legally entitled to lengthy periods of reasonable notice without any obligations and employee counsel will be quick to request same without factoring in the employee's duty to mitigate. However, employees who are let go have a responsibility to try to improve their circumstances following dismissal, such as conducting reasonable searches for employment. It's important for employers to understand this employee obligation if facing a wrongful dismissal suit. BACKGROUND

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