CAREER CHANGE PURSUIT AND FOREWARNING OF TERMINATION REDUCED EMPLOYEE’S NOTICE PERIOD BY 9 MONTHS
In the decision of Patel v Crimp Circuit [Patel], in which Williams HR Law’s Joel Smith represented the employer, the employee’s failure to take reasonable steps to seek comparable employment and the employer’s provision of working notice influenced Deputy Judge Bocci to reduce a former employee’s notice period from 14 months to 5 months.
Justice Bocci reduced the reasonable notice period by 7 months because of the employee’s failure to mitigate their damages, as he failed to pursue job opportunities within the same industry in which he had worked at the time of dismissal, and in which had experience. In doing so, the employee failed to accept a job offer to do comparable work with the purchaser of the employer’s company. Additionally, the employer’s consistent and unambiguous communication to the employee that the business would be shutting down, therefore leaving the worker unemployed, bolstered Justice Bocci to reduce the reasonable notice period.
The employer (“CCI”) was a printed circuit board manufacturer that dismissed the employee without cause after selling the business to a purchaser. Prior to dismissing the employee, CCI communicated to their staff numerous times between July 2018 and February 2019 that the plant was being shut down and sold to a purchaser, such that workers would have their employment terminated.
The employee, Mr. Patel, was employed with CCI for 14 years as a Quality Assurance Inspector. The employee claimed he was wrongfully dismissed by CCI and sought a notice period of 14 months.
Prior to accounting for any mitigating factors, Justice Bocci found that the employee’s initial reasonable notice period was 14 months based on the Bardal factors. The employee’s failure to mitigate his damages by seeking comparable employment reduced his reasonable notice period by 7 months. In coming to this finding, Justice Bocci recognized the significant onus on employers to prove that an employee has failed to discharge their well-established duty to mitigate damages upon being wrongfully dismissed. However, CCI proved that the employee both failed to take reasonable steps in seeking comparable employment, and that the employee would have been expected to secure a comparable position reasonably adapted to his abilities had he conducted an active job search. Further, the employee had a duty to “act reasonably in seeking and accepting alternate employment”.
Justice Bocci considered the employee’s failure to apply for CCI’s competitors who CCI advised him were looking for experienced workers like him and broader decision not to look for work in the industry and found that the employee failed to discharge his duty to seek alternate employment. She concluded that the employee had “no desire whatsoever to obtain a comparable job in the same field as he had previously worked”.
CCI’s forewarning in 2018 and 2019 that the business would be sold or closed before the employee’s employment was ultimately terminated was also considered in reducing the notice period. The employee claimed he did not take CCI’s forewarning seriously because “there was still a lot of work coming in” and because he perceived the communication to merely be a “ploy” to incentivize the workers to be more productive. However, Justice Bocci determined that he should have taken the notices more seriously.
Takeaways for employers
The Patel decision reinforces the principle that employers are not “required to fund the [employee’s] choice to retrain and change his career, particularly when comparable work is available”.
Employers can realize significant savings if they make dismissed employees aware of comparable employment opportunities, as the employer did in this case. This can benefit employers as it can lead to the former employee re-employing sooner after dismissal and therefore mitigating their damages, which reduces the amount owed by the employer to their former employee in respect of the common law notice period. Alternatively, if the former employee does not pursue those comparable opportunities, that can be relied on by the employer as evidence that the former employee failed in their duty to mitigate their damages, as was the case in Patel.
Further, employers that are interested in communicating future termination of employment to a worker must provide the employee with “clear and unambiguous” notice of termination, including the date on which they will dismiss the employee. However, even where an employer is not ready to provide that clear and unequivocal notice of dismissal, absent business reasons not to inform employees, the ultimate notice periods owed to the employees likely to be dismissed in future can be reduced if the employer provides forewarning to the employee of the likely end of their employment. The Patel decision demonstrates that even if the employee’s employment will not definitely end, and even if the end date of the employment is not yet certain, sharing the fact that the employee’s employment is likely to come to an end can reduce the notice period owed.
Ideally, however, employers should avoid the entire issue of common law reasonable notice being owed to employees being dismissed by entering into employment agreements with their employees that contain enforceable termination clauses. As many employers know, termination clauses can limit an employee’s termination entitlements to as little as their minimum termination entitlements under the Employment Standards Act, 2000, which in most cases is dramatically lower than the employee’s common law notice entitlement. Where an employee’s employment is governed by a termination clause, the employee is not entitled to common law reasonable notice and will instead be entitled only to whatever amount of notice is set out in the termination clause, and the issues of mitigation and forewarning therefore will not be relevant.