In Jimmy How Tein Fat v. PRGX Canada Corp. [PRGX], the Ontario Superior Court of Justice (the “Court”) awarded a 24-month notice period equivalent to nearly $1.6 million to a dismissed employee. While the Court acknowledged that the employee’s efforts to mitigate his damages by searching for alternative employment were imperfect, the employee was still awarded damages commensurate with the full 24-month notice period.
At the time of dismissal, the 63-year-old employee had worked with the same employer for 29 years. While he was originally hired as an accountant, the employee held the title of VP of North America Operations and Global Audit Innovation.
As the employer was undergoing restructuring in 2022, the employee was dismissed without cause. The employee was provided only with his minimum statutory entitlements under the Employment Standards Act, 2000 [ESA], including eight weeks of termination pay in lieu of notice, as well as 24 weeks of severance pay.
The Court awarded the employee a 24-month notice period. In deciding to award such a lengthy notice period, the Court considered the senior nature of the employee’s role, his high-level compensation, him being “in the twilight of his career”, his lengthy service time, and the niche industry in which he had experience. In particular, the Court focused on the employee’s extensive work history with just one company, as his skills became specialized in a manner that did not necessarily “translate elsewhere in the workforce”. The Court reasoned that these characteristics indicated that the employee would experience increased difficulty finding comparable employment, and thus required a lengthier notice period.
This decision continued the trend of courts emphasizing long-term employees’ specialized skills to justify lengthy notice periods, as was the case in Lynch v Avaya Canada Corporation and Milwid v IBM Canada Ltd. For more information on those decisions, please see our previous blog on the relevance of specialized skillsets to reasonable notice assessments.
In an effort to reduce the employer’s costs, the employer argued that the employee failed to fulfil his duty to mitigate after dismissal. Importantly, the employer had the onus to prove that 1) the employee failed to take reasonable steps to mitigate his losses by seeking alternative comparable employment, and 2) had the employee taken such steps, he would have been expected to secure a comparable position “reasonably adapted” to his abilities. The Court emphasized that the employer’s burden to prove the employee’s failure to mitigate was “by no means a light one”.
The Court acknowledged that the employee’s job search was, at least initially, flawed. Specifically, the employee failed to engage early on with competitors in his former employers’ industry when trying to find a new position. Given the employee’s specialized skillset, the Court stated that the employee “would have been wise […] to begin his search within the [niche] industry in which he worked much earlier”.
Despite the Court’s criticism of the employee’s imperfect mitigation efforts, it found that the employee’s delayed start in approaching industry competitors was not in and of itself unreasonable. Considering the employee’s otherwise extensive evidence which proved his efforts to mitigate, including a detailed log of his attempts obtain senior level employment across various industries, the Court held that he did not fail to discharge his duty to mitigate.
In assessing whether the duty to mitigate was fulfilled, the Court also considered the employer’s conduct. In particular, the Court said that employers who wish to argue a former employee’s mitigation efforts were unreasonable “would be well advised to present evidence of assistance that was offered to the terminated employee during his or her job search”. In PRGX, the employer failed to follow through on its promise to provide the employee with a reference letter. Accordingly, the Court stated that the employer’s refusal to do so was indicative of an intention to “use what [the employer] saw as a gap in [the employee’s] mitigation effort as a means to limit his damages claim”.
Ultimately, the Court held that the employer did not meet the high threshold to prove the employee failed to mitigate. As such, the employee was still entitled to the entirety of his 24-month notice period.
Takeaways for Employers
Employers engaged in wrongful dismissal litigation should be cognizant of the high degree of difficulty in proving a former employee failed to uphold their duty to mitigate. The PRGX decision follows a long line of cases which have established that employees will not be held to the standard of perfection in their efforts to re-employ. In PRGX, even successfully establishing that the employee’s job search was poorly conducted, insofar as he failed to inquire with competitors in the industry about available positions early on, was insufficient to reduce the employer’s costs.
In addition to arguing that a wrongfully dismissed employee has not taken reasonable steps to search for a job, prudent employers should also gather evidence that comparable positions were available during the employee’s notice period. Such evidence should capture details of job openings, including the date on which the job was posted, the qualifications required for the position, and details regarding compensation.
Lastly, employers should note that courts will look unfavourably on employers who hindered a former employee’s job search. Ultimately, it can work in the interests of both parties for an employer to provide their former employee with a reference letter that would be assistive to the employee in their search for a new job.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.