The duty to mitigate is an important issue in most wrongful dismissal cases. The issue was recently discussed by the Supreme Court of British Columbia in Koenig v. Brandt Tractor Ltd.,2013 BCSC 920.
In this case, the employee was employed by the defendant as its Parts Manager at its Vernon branch. This is a position he held since 2004. He had been employed since 1987. The employee was given notice of termination on January 9, 2009. He was given 9 ½ months of working notice. Mr. Koenig found secured comparable alternate employment on April 26, 2010.
The plaintiff claimed that his employer failed to provide him with reasonable notice of termination.
The employer took the position that the plaintiff failed to mitigate when he refused to consider a possible offer of employment. According to the Court:
Mr. Jones thought that Mr. Koenig would be “ideal”. He contacted Mr. Koenig in June or July 2009 to ask if he was interested in the position of Parts Manager at Freightliner. He believes that he described the compensation and benefits to Mr. Koenig. He told Mr. Koenig that Freightliner was very interested in hiring him.
Mr. Koenig expressed no interest. Mr. Jones deposed that if the plaintiff had shown interest, he would have offered him the job. He had authority to do so. No interview process or reference checks would be necessary because Mr. Jones knew Mr. Koenig.
It would seem that the plaintiff declined to pursue the opportunity because of concerns he had with certain practices that he suggests he reported. However, the individual to whom he allegedly reported the concerns explained that when he asked for information and particulars about the concerns he did not provide any.
The Court summarized the law relating to the duty to mitigate:
In seeking and accepting alternative employment, the plaintiff has a duty to act reasonably and to take such steps as a reasonable person in the plaintiff’s position would take in his own interest to maintain his income and his position in his industry, trade or profession. The duty involves a constant and assiduous application for alternative employment, an exploration of what is available through all means ....
While the law does not "require" (to use the words of the court) the plaintiff to pursue any particular employment, there may be implications on a damages claim where the terminated employee fails to do so. In this case, the plaintiff raised "reservations" in pursuing the employment opportunity in question. This was found to be unreasonable in the circumstances and resulted in an adverse finding to the employee.
According to the Court "if he had taken the job, as he reasonably should have, then he would have suffered no loss of income".
The claim was dismissed.
While the defendant bears the onus of establishing that the plaintiff failed to mitigate, and while it is a heavy onus, it is not one that is insurmountable. Employers should compile a variety of evidence of comparable employment opportunities to assist in demonstrating that the employee failed to mitigate. The Koenig case is an excellent example of how a dilligent and thorough investigation can meet the onus.
The BC Court of Appeal in Allen v. Ainsworth Lumber Co. Ltd., 2013 BCCA 271 recently affirmed a trial judgement that found that an employee who was advised that he was relieved of his duties, and to "go home" while the employee paid him had been dismissed and was not required to mitigate his damages.
When he found work, during the 15 month period, at remuneration greater than that which he made in his former employment, his former employer ceased payments to him. He sued. The central issue was whether the employee was terminated when he was "relieved of his duties" or whether he was "constructively dismissed" and obliged to mitigate. The Court summarized the argument as follows:
[The employer] submits those findings cannot support a conclusion that its withdrawal of [the employee’s] duties on October 14, 2009 represented a clear and unequivocal termination of his employment contract that day. Instead, [the employer] says that letter placed [the employee] on working notice for 15 months. It accepts that the concurrent removal of his employment duties constituted a repudiation of his employment agreement, but says this alone did not terminate that agreement. The consequences of the repudiation depended on [the employee's] response to it. If he did not accept it, he could claim he was constructively dismissed and sue for wrongful dismissal in accord with the principles affirmed by the Supreme Court in Farber v. Royal Trust Co.,  1 S.C.R. 846
The Court of Appeal found that, in the circumstances, the employee was dismissed on October 14, 2009 when he was relieved of his duties, and that he was entitled to 15 months salary and benefits in lieu of notice.
The Court pointed out, and this comes from the trial judgment, that "the parties revised his employment contract to improve the severance provisions in his favour: in the event of termination without cause, [the employee] would receive either 15 months’ salary and benefits, or “pay in lieu”."
The Court of Appeal observed:
[The employee's] employment agreement did not impose a duty to mitigate, and the trial judge properly found he was therefore entitled to the balance owing for 15 months’ salary and benefits in lieu of notice as damages for breach of contract
The case is interesting and highlights the need for clarity at the point of termination and in employment contracts. While there are a great many reasons for relieving someone of their continued obligations to attend at work, it is important to deal with "what happens" if the employee secures employment during the severance period and not leave that to legal argument. Furthermore, careful drafting at the front end, at the time of hiring when good will is at its highest, can often avoid costly litigation. That said, in this case, as the trial judge pointed out, the amendment to the employment agreement described above, was negotiated in the context of "the company’s uncertain future and the consequent risk to [the employee's] continued employment", and that context is important on a practical level in understanding the contract.
Hat tip to Greg Gowe for alerting me to this case.
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