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How Does Returning to School Affect an Employee’s Duty to Mitigate Losses?

By , September 13, 2018 2:33 pm

A terminated employee has a duty to mitigate his or her damages by looking for alternative employment. We are often asked questions like: Can an employee start her own business? Can he or she return to school or a retraining program? This blog addresses these questions.

The General Principle Around Returning to School

Two scholars summarized an employee’s duty  to mitigate damages in their 2001 book where they stated, A return to school does not generally satisfy the duty to mitigate unless the student remains available for work and is actively pursuing alternative employment. The critical factor, in all cases of mitigation, is that the employee behaved reasonably in attempting to mitigate his or her loss.”  [emphasis added]. This passage has since been cited by Ontario courts.

The balance of this blog discusses the application of this legal principle to two fact situations.

Case 1: Mr. Benjamin Failed to Mitigate his Damages by Returning to School

In a recent blog post, we discussed a case where an unskilled labourer made the decision to enroll in a retraining program after he was dismissed without cause. Mr. Benjamin worked for the employer for about 28 years mostly as a line operator. After being terminated, Mr. Benjamin chose to attend a full-time program to retrain as a welder. He participated in this 6-month program from August 2016 to February 2017 in order to “brush up from unskilled labour to skilled labour”.

The employer paid Mr. Benjamin the equivalent of 8 months’ salary and argued that he failed to reasonably mitigate his damages after June 2016 because he decided to start a new career as a welder and chose not to seek comparable work after enrolling in the skills program.

The judge applied the test from a leading Supreme Court of Canada case to Mr. Benjamin’s situation. The ‘test’ on the duty to mitigate in wrongful dismissal cases places the onus on the employer to establish both of the following:

  1. the employee did not take reasonable steps to seek comparable employment, and
  2. if the employee had done so, he or she could have procured such comparable employment.

In applying this test, the judge concluded that the employer met its onus and established that Mr. Benjamin failed to reasonably mitigate his losses upon termination. Specifically, the employer provided significant post-employment job search assistance to Mr. Benjamin and other terminated employees. This assistance included outplacement counselling sessions, one-on-one coaching, and providing leads to employees about jobs.

Despite this assistance, Mr. Benjamin did not apply to the two comparable jobs that his former employer informed him about and instead chose the welding program. Accordingly, it was held that there were comparable jobs available to Mr. Benjamin that he “could have” procured but he unreasonably made the decision not to apply for such comparable jobs. Therefore, it was concluded that Mr. Benjamin’s entitlement to wrongful dismissal damages ended as of the date early June 2016 ( or the latest July 2016 when the first of the available positions was filled).

Case 2: Ms. Carpenter Mitigated Her Losses Before Returning to School

In a 2016 case, Ms. Carpenter was terminated due to financial difficulties of her employer. She was terminated at the end of May 2014 and was unemployed between July 2014 to January 2015. The judge found that during this approximately 7-month period of unemployment, she applied to over 50 positions, attended 3 jobs workshops, and three networking events. In January 2015, Ms. Carpenter chose to return to school.

The trial judge concluded that based on her 6 1/2 years of employment, the appropriate notice period was 8 months. Interestingly enough, this 8 months’ notice period took Ms. Carpenter all the way up to the time she began school, in January 2015.

This case is in contrast to the one above as the judge concluded that Ms. Carpenter had made reasonable efforts to mitigate her damages before deciding to return to school. The judge held that she was entitled to 8 months’ notice, which would take her from May 2014 to January 2015, when she stopped her job search.

Since Ms. Carpenter satisfactorily mitigated her losses, the judge concluded that she should not lose any credit for the sums due to her because of her decision to leave the workforce in late-January 2015.

Conclusion

What do these contrasting decisions mean for employees? Judges consider whether an employee acts reasonably when attempting to mitigate his or her loss. The question of when returning to school is reasonable depends on a variety of factors that range from the industry to the dismissed employee’s efforts at obtaining alternative employment to the length of time the employee looks for alternative work before enrolling in a re-training program. If you are deciding to enroll in a retraining program after a termination, it is important to consult an employment lawyer to ensure that you are complying with your duty to mitigate your damages.

If you have questions about your rights regarding termination clauses and would like more information, you can contact an employment lawyer at MacLeod Law Firm. You can reach us at [email protected] or 647-204-8107.

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

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