Employers Must Discharge Their Onus to Prove Failure to Mitigate A recent 2020 decision of the British Columbia Supreme Court, Virk v. Satnam Education Society of B.C., was a reminder that in wrongful dismissal litigation, the employer has the burden to prove an employee’s failure to mitigate. When an employee has been wrongfully dismissed, they are obligated to act reasonably by taking steps to replace their income by applying for alternative positions. This involves applying for new jobs on a “constant and assiduous” basis. However, it is ultimately the employer’s responsibility to prove that the employee failed to take adequate steps to mitigate their losses, and had the employee made adequate mitigation efforts, they would likely have found a new job. If the employer is successful in proving that the employee has failed to mitigate, the employee would be entitled to a reduced notice period at common law. In this case, Mr. Virk was a vice-principal of a Sikh private school. He was terminated in June, 2010. Afterwards, he applied to teaching positions at four schools, tutorial academies and to a learning disabilities society. Mr. Virk then applied to freelance journalist positions at newspapers and radio stations. Since Mr. Virk had a class 1 driver’s license, he then applied to jobs in the trucking industry. He eventually obtained a position at BC Transit approximately one year after his termination. The court found Mr. Virk’s efforts to mitigate his losses were inadequate since he had only applied for a few positions and there was no evidence that he had applied for any positions after October 2010. However, the court pointed out the following inadequacies of the employer’s evidence, in particular: The number and types of teaching jobs available in 2009/2010 and when they were available The hiring timelines for the school year How easy or difficult it is to transfer from teaching at private to public schools The number and types of jobs in the newspaper industry that year The number and types of jobs in the transport industry that year In the absence of such evidence, the employer failed to establish that Mr. Virk did not take adequate steps to mitigate and had he done so he would have found employment (para 109). Key Takeaway for Employers: Keep abreast of the labour market trends for your industry but also what other industries the former employee is applying to. Provide job postings, reports, articles or other data to demonstrate how easy or difficult it is to obtain work in a particular field. By taking these steps, employers can increase their likelihood that an adjudicator will find their duty to prove an employee’s failure to adequately mitigate was discharged. However, keep in mind that due to COVID-19, market trends have been severely impacted. As a result, it will likely be more difficult for employers to prove that employees would have found work if they took adequate mitigation steps since the pandemic has significantly affected employment opportunities in numerous industries. If you have more questions about an employer’s obligations after a dismissal contact employment lawyer Marty Rabinovitch at 416-446-5826 or at marty.rabinovitch@devrylaw.ca. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Employment LawJuly 20, 2020November 16, 2020
Can I Still Claim my Bonus even though I was Wrongfully Dismissed? This blog is co-written by our former articling student, Janet Son. In Andros v Colliers Macauley Nicolls Inc, the Ontario Court of Appeal recently addressed the issue of whether a wrongfully dismissed employee is eligible to receive a payment in lieu of bonus throughout the common law notice period. If the bonus is non-discretionary and an integral part of the employee’s compensation package, damages for wrongful dismissal include bonuses earned in the year of termination, on a pro-rata basis, plus a payment in lieu of bonus throughout the common law notice period. In this case, the respondent worked for the appellant, a large commercial real estate company. He left for other employment, however he returned and was promoted to the position of Managing Director, which included a base salary and a yearly bonus. In the last three years of his employment his base salary was $142,500 and his bonuses were $79,228.25, $127,933.80 and $49,757.51 respectively. The Court found that the bonus was non-discretionary since he received the bonus every year and his employment agreement included both the base salary and bonus entitlement in the compensation section. Further, the Court concluded that the bonuses were integral to the employee’s compensation, given the bonus amounts. The appellant argued that the employee was not entitled to any further bonus payments, because there was a term in his employment contract which stated that only employees who were in “good standing” were entitled to bonus payments. The Court applied the test from Paquette v TeraGo Networks Inc. to this case. 1. First, determine the employee’s common law right. Where the bonus is such an integral part of the respondent’s compensation, there is a common law entitlement to the bonus that the employee earned or would have earned. 2. Second, whether there is something in the bonus plan that removes the employee’s common law entitlement. In arriving at the decision to award the employee a payment in lieu of bonus throughout the common law reasonable notice period, the court addressed the inherent unfairness in a scenario where the notice period expires the day before the date on which the bonus would be payable. As a result, the employee would get no part of the bonus that they earned throughout the course of their employment during that year and the notice period – which the Court concluded would be unfair to the employee. However, an employer can contract out of the requirement to pay a portion of a yearly bonus for a partial year of service or throughout the common law notice period if this is set out clearly in the employment contract or bonus plan. If you are unclear as to whether you are entitled to your bonus in a wrongful dismissal claim, contact human rights and employment lawyer Marty Rabinovitch at 416-446-5826 or at marty.rabinovitch@devrylaw.ca “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Employment LawNovember 21, 2019July 5, 2023
Income Earned by Wrongfully Dismissed Employees No Longer Automatically Deducted Under the Duty to Mitigate The duty of wrongfully dismissed employees to mitigate their damages is no longer as clear-cut as it once was. Notice periods are seen as an amount of time, or a level of compensation, to assist a dismissed employee to find comparable work. Previously, lawyers made the assumption that any income gained by an employee during an employment notice period was to be automatically deducted from the amount an employee would be entitled to, due to the fact that the employee successfully mitigated the damages that their previous employer was responsible for. However, in Brake v PJ-M2R Restaurant Inc, the Court of Appeal declined to lessen the wrongful dismissal damages an employee was entitled to because of income earned from other employment during the notice period. The employee, Esther Blake, was awarded more than $104,000 for a 20-month notice period due to wrongful dismissal. The defendant, PJ-M2R Restaurant Inc, is a holding company that owns franchised McDonald’s in the Ottawa area. Esther worked as a manager at one of the McDonald’s locations for 25 years until she was wrongfully dismissed. While working at McDonald’s, Esther also worked a part-time job at Sobey’s as a cashier. When Esther was dismissed from McDonald’s, she continued to work at Sobey’s as she did before but expanded her hours there as she was no longer working full-time at McDonald’s. The Court of Appeal declined to see the Sobey’s employment as income from mitigation as she would have continued to work there part-time regardless of her status at McDonald’s. Also of note is Court of Appeal Justice Kathryn Feldman’s concurring decision in this case. The lower court judge determined that $600 that Esther received from Home Depot during the notice period should also not be deducted as it was “so substantially inferior” to her managerial position at McDonald’s (para 24). While Justice Feldman did not use the same wording, she reiterated that employees are entitled to turn down jobs that are not comparable, without having the potential income from that job deducted for a failure to mitigate losses. Using that reasoning, an employee should not be penalized when they choose to accept the job that they were entitled to turn down. Justice Phillips of the Court of Appeal did not deduct this income either but stated it was due to the lack of clarity regarding the income. The clear implication of this case is that employment lawyers will need to prove not only the amount of income an employee earned during the notice period but the nature of the work that income came from. With a changing economy and the rise of non-standard work, it will be interesting to see how the Court of Appeal treats mitigation efforts as comparable standard employment becomes more elusive. Devry Smith Frank LLP is a full-service law firm that has experienced lawyers within our employee and employment law group. If you are in need of representation, please contact one of our lawyers today or call us directly at 416-449-1400. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Employment LawJune 22, 2017June 24, 2020
