Canadian Employment Law Today

Canadian Employment Law Today | 3 Canadian HR Reporter, a Thomson Reuters business 2017 Cases and Trends When mitigation isn't mitigation Ontario Court of Appeal stirs controversy by not excluding employee's income during notice period from constructive dismissal damages BY RHONDA COHEN AND TIM ALLEN IN A RECENT decision, the Court of Ap- peal for Ontario erred when it excluded from "mitigation income" all earnings by a dismissed employee during what the court referred to as the "statutory entitlement period" — a notional period created by the court, equivalent to the number of weeks used to calculate the employee's entitlement to pay in lieu of notice and severance pay un- der the Employment Standards Act (ESA). Essentially, the court erred by confusing "statutory payments" — pay in lieu of no- tice and severance pay — with other income earned during the notice period. Statutory payments are mandated, minimum sums payable in any event. ey are not "replace- ment" income and cannot be reduced by other mitigation income (Boland v. APV Canada Inc.). By contrast, all other income earned during the notice period is replace- ment income, except for supplementary in- come. The court's error appears to be based on a misreading or misunderstanding of Boland. Unfortunately, until this error is corrected, it is likely to be followed and perpetuated by other courts. In a separate but concurring judgement, Justice Feldman also erred when she held "mitigation income" did not include earnings from a position so inferior to the original position the employee would not breach her duty to mitigate by not tak- ing it. This reasoning was rejected by the majority and inconsistent with the law of mitigation. Why did these errors occur? The familiar adage of 'bad facts make bad law' may be to blame. In this case, the employee's circum- stances were sympathetic and the employer's behaviour less than exemplary. It is possible the court was trying to help the employee keep more money in her pocket. However, when the Court of Appeal speaks, other courts must listen, and the law of employment mitigation may now have changed, in error. For more than 25 years Esther Brake was a good employee for a large fast food chain, eventually acheiving a managerial position. Over time, Brake's performance slipped slightly. She also began supplementing her income with part-time work at Sobey's. Ul- timately, Brake was off ered a demotion — which she rejected — following which her employer considered her to have resigned. The details of Brake's performance issues were not material for the discussion of mitiga- tion. Suffi ce it to say, both the trial and appeal courts found Brake's treatment to have been less than fair. This included her participation in a performance management program the courts found was applied unfairly and "set up" to ensure Brake would fail. Against this backdrop, it is not surprising the court found the demotion to be a construc- tive dismissal. It awarded damages equivalent to 20 months' pay ($104,499.33), inclusive of THE OSGOODE CERTIFICATE IN LABOUR LAW JANUARY 23 - FEBRUARY 27, 2018 5 DAYS OVER 5 WEEKS Learn from leading experts representing management, union and government. A Certificate program with emphasis on the practical. Don't miss your chance to better equip yourself to deal with the challenges coming across your desk in this still-evolving, high-stakes area. Register today at: osgoodepd.ca/labour-celt STATUTORY on page 9 »

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