In Lake v La Presse, the Ontario Court of Appeal (“ONCA”) determined that the motion judge erred in reducing the employee’s wrongful dismissal damages for failure to mitigate. The ONCA confirmed that the duty to mitigate does not require dismissed employees to apply to lesser paying or less senior positions, even after a reasonable period of attempting to find comparable employment.

Background

The employee was dismissed without cause after five and a half years of employment as a General Manager. The employee commenced an action for wrongful dismissal and brought a motion for summary judgment. Although the employee began searching for alternative employment approximately two months after receiving notice of termination, she remained unemployed at the date of the summary judgment motion—nearly two years after her dismissal.

The motion judge reduced the employee’s reasonable notice period from eight to six months due to the employee’s failure to take reasonable steps to mitigate her damages.  In this regard, the motion judge held that the employee: waited too long before beginning her job search; “aimed too high” in applying for vice-president roles and should have applied for less senior positions if she continued to remain unemployed; and applied to very few jobs, with only 11 applications within the year following her dismissal.

The Court of Appeal Decision

The ONCA found that the employee did not fail to take reasonable steps to mitigate her damages. The ONCA reiterated the longstanding principle that the onus of proving that an employee has failed to meet their duty to mitigate lies with the employer.

In assessing the motion judge’s mitigation analysis, the ONCA held:

• The motion judge did not err in concluding that the employee waited too long before beginning her job search;
• The motion judge erred in finding that an employee must start looking for less remunerative positions after a reasonable period of attempting to secure a comparable position. The ONCA clarified that a dismissed employee’s duty to mitigate is to seek “comparable employment”, which typically is employment that is similar in status, hours and remuneration to the position held at the time of dismissal;
• The motion judge also erred in finding that the employee only applied for positions that would represent a promotion over her prior role. The employee provided evidence that the vice-president positions she applied to involved similar job responsibilities to her previous employment as General Manager. The ONCA held that the motion judge placed too much emphasis on the titles of the positions the employee had applied for, without adequately considering the employee’s evidence that the positions to which she applied involved similar responsibilities to her previous employment; and
• There was no evidence to support the motion judge’s inference that the employee would have found comparable employment if she had taken reasonable steps to mitigate her damages.

Ultimately, the ONCA allowed the appeal, set aside the judgment under appeal, and replaced it with a judgment that bases the wrongful dismissal damages on eight months’ notice, without reduction for failure to mitigate.

Takeaways for Employers

This decision serves as a reminder that the burden of proving that a dismissed employee has failed to mitigate their damages lies with the employer. The employer in this case failed to offer any evidence to counter the employee’s evidence that the positions to which she applied involved similar responsibilities to her previous employment, and that there were limited job opportunities in the industry at the time.

To establish that an employee has failed to mitigate their damages, employers should compile evidence of employment opportunities that are comparable to the employee’s previous role in terms of status, hours, pay and job responsibilities. Employers should give proper consideration to these factors, and not simply review job titles.

Employers should also be mindful that a dismissed employee’s unreasonable delay in beginning a job search may be viewed as a failure to satisfy the duty to mitigate. Evidence of such a delay may be relied upon to lower the wrongful dismissal damages that would otherwise be payable to an employee.