The Impact of a Failure to Mitigate

A dismissed employee who fails to take reasonable steps to search for new employment may find that a court will reduce his or her entitlement to wrongful dismissal damages. It is a question of fact. The trial judge has a great deal of discretion when deciding how much the damage award should be reduced. The employer bears the evidentiary burden of proving that the dismissed employee failed to mitigate his or her damages.

An extreme example of the impact of failing to take reasonable steps to attempt to find new employment is the 2006 decision of the British Columbia Superior Court in Cimpan v. Kolumbia Inn Daycare Society.1 Justice Truscott found that the plaintiff had been wrongfully dismissed and, based on the relevant common law factors, held that the plaintiff was entitled to nine months reasonable notice of dismissal. However, Justice Truscott refused to award damages for wrongful dismissal finding that she had not made any efforts to find alternative work after her dismissal because her husband’s salary was sufficient to provide for the family. Instead, the plaintiff had enrolled in a 48-week course to assist her in establishing her own daycare.  Justice Truscott ordered the plaintiff to pay a portion of her former employer’s legal costs. In finding for the employer, Justice Truscott wrote at paragraphs 107 and 108:

It cannot be the law that a dismissed employee can elect to take further training for self-employment and charge that to the employer, unless the employee cannot obtain alternate suitable employment.

While the onus is on the defendant to prove the plaintiff has not mitigated, it would be impossible for any employer to prove that the employee would have been able to secure a particular job. Here the defendant has proven to my satisfaction that there were comparable positions available through the newspaper. I believe it has satisfied its onus.

The plaintiff’s award of 10 months notice of dismissal was reduced to 6 months in the 2016 Ontario decision Sinnathamby v The Chesterfield Shop Limited.2 The plaintiff had claimed a notice period of 18 months but had not searched for new employment during the first 15 months of her claimed notice period. The plaintiff’s claim that her medical condition prevented her from looking for new employment was rejected by the motion judge because she had relied on inadmissible medical evidence and was found not to be a credible witness. 

In Miller v. Gateway Co-operative Ltd.3 Justice Osborn held that the dismissed employee failed to mitigate his losses following his dismissal for poor performance. The plaintiff had secured alternative employment during his eight-week notice period but at a much lower rate of pay.  However, shortly after commencing work at his new position, the dismissed employee was offered a choice of two positions at his previous employer at the same or better rate of pay that he had previously enjoyed. The plaintiff did not accept either offer of reemployment. Justice Osborn determined that the dismissed was only entitled to eight weeks’ notice, in accordance with the employer’s policy, as he failed to mitigate his losses.

In the 2014 decision Hyland v. Advertising Directory Solutions Inc.4 the Alberta Court of Queen’s bench found that a dismissed employee who began day-trading stocks rather than actively look for new employment had failed to mitigate his damages and reduced the former employees notice period from 11 to 7 months finding that the employer had proven that the employee would have found new employment if he had taken reasonable steps to find new employment.  Before reaching judgment, Justice Bensler provided a useful review of the caselaw that has considered the impact of a failure to mitigate writing:

70    Courts have disagreed on the effect of a failure to mitigate. Some courts have reduced damages based on the estimated amount the plaintiff could have earned in mitigation. Others have reduced the notice period to reflect the time in which the terminated employee could have found a new job with proper efforts. Still others have excluded damages for the time in which the employee made insufficient efforts to mitigate.

71    In most cases, the respective courts reduced the notice period. This is the approach I will apply in this case.

72    Yellow Pages argues that Mr. Hyland’s failure to mitigate should lead to a finding that the roughly eighteen weeks’ severance already provided to him is sufficient. It suggests that a complete failure to mitigate should result in a dismissal of a claim for damages, while a partial failure to mitigate should only result in a reduction.

73    Quantification of the failure to mitigate is a difficult assessment. There is little assistance from the caselaw as to how to quantify a failure to mitigate. In the absence of evidence of a specific job that was available to the plaintiff, the amount by which damages are reduced seems to be arbitrary.

74    Courts have taken a variety of approaches to quantifying a failure to mitigate following a wrongful termination. For example, in Ceccol v Ontario Gymnastic Federation, [1999] OJ No 304 (Ct J (Gen Div)), aff’d 55 OR (3d) 614 (CA) (“Ceccol“), Pitt J reduced the notice period from sixteen months to twelve months. While the plaintiff in Ceccol made no attempt to find similar employment following termination, there was credible evidence that government retrenchment left the plaintiff with few employment opportunities. Similarly, in Colvin v A Child’s View Learning Centre Ltd, 2003 ABPC 153 (“Colvin“), six months reasonable notice was reduced to three months due to a failure to mitigate. The plaintiff in that case was found to have clearly been contemplating a change in occupation, contacting only two potential employers in daycare, her previous area of employment.

75    In contrast, the plaintiff in Cimpan v Kolumbia Inn Daycare Society, 2006 BCSC 1828 (“Cimpan“) had her claim dismissed entirely due to a failure to look for similar employment. In that case, there was evidence of similar employment, but the plaintiff instead chose to open her own business, for which she enrolled in a college program. The plaintiff would have been entitled to nine months’ salary in lieu of reasonable notice if she had mitigated. Similarly, in Hart v EM Plastic & Electric Products Ltd, 2008 BCSC 228 (“Hart“), Bruce J reduced the notice period to the applicable statutory minimum of eight weeks. In that case, the plaintiff had actually been approached by competitors of the terminating employer about working for them within two months of his dismissal.

76    In cases where an employee refuses a specific offer of similar employment, some courts have reduced the plaintiff’s notice period to the date of that unreasonable refusal.

77    Another approach is to reduce the notice period based on when the plaintiff would likely have found work through reasonable efforts.

78    In support of its argument that a complete failure to mitigate should lead to a dismissal of a plaintiff’s claim, Yellow Pages cites our Court of Appeal’s decision in Deputat v Edmonton School District No 7, 2008 ABCA 13 (“Deputat“). In that case, the defendant employer gave the plaintiff twelve months of working notice. The Court found this to be insufficient notice at common law, and increased the notice period to eighteen months. However, due to the plaintiff’s failure to mitigate, the Court reduced the additional six months’ notice to three months. The plaintiff in Deputat did not look for any work during the first seven months of his working notice period, and later ceased doing so three months after termination. Yellow Pages argues that this decision stands for the proposition that a failure to mitigate should lead to the notice period being cut-off when an employee stops looking for similar work.

79    I do not accept Yellow Pages’ interpretation. The Court in Deputat emphasized that the plaintiff’s failure to begin a formal search for similar employment during the first seven months of his working notice period represented a failure to mitigate: paras 27-28. Thus, the Court did not simply find that the plaintiff’s failure to mitigate began when he stopped looking for work in the final three months of his common law reasonable notice period. To assert as Yellow Pages does that Deputat stands for the proposition that the notice period should be cut off when the plaintiff stops looking for work would render meaningless any finding that the plaintiff took too long to start looking for work during a working notice period. Clearly, the Court in Deputat, by overturning the trial judge’s finding that there was no duty to look for similar work during the first seven months of the plaintiff’s working notice period, did not intend such a result. Given that the plaintiff in Deputat took almost no formal steps to mitigate his damages for ten months of the eighteen month period of reasonable notice, a court adopting Yellow Pages’ argument would more properly dock the entire additional six months added to the plaintiff’s working notice period based on ten months of failing to look for work.

80    In quantifying an appropriate reduction of Mr. Hyland’s notice period, I find the recent decisions by this Court in Johnson v Top-Co Ltd, 2009 ABQB 731, 488 AR 182 (“Johnson“) and Robinson to be persuasive. In Johnson, the plaintiff made no effort to explore the job market, and instead became self-employed. The plaintiff in that case actually had two specific opportunities to obtain full-time employment, but failed to follow-up with the potential employers, in part due to health concerns. As a result, there was no evidence as to whether these positions would have been suitable replacement employment. There was, however, clear evidence that the plaintiff in Johnson had skills that were valued in the industry, based on the lengthy period of time it took the defendant to replace him and a feeling in the industry at the time that there were more jobs available than there were qualified personnel. Despite the plaintiff’s complete failure to mitigate his damages and the unreasonableness of his decision to enter into self-employment, Browne J only reduced the notice period from twenty months to fourteen months, rather than dismissing the claim entirely or reducing the notice period to a mere few months which he found to be a reasonable time period in that case to get over the shock of dismissal.

81    In Robinson, Lee J found that the plaintiff did not take several basic steps to find similar employment. As a consequence, Lee J reduced what would have been an eighteen month notice period to twelve months. Notably, the evidence in that case established that during the notice period there was an “unprecedented boom” in the industry the plaintiff had been employed in. It was therefore likely that the plaintiff could have easily found similar employment had he taken all the reasonable steps to do so.

Other decisions that have reduced the wrongful dismissal damage award because the dismissed employee failed to properly mitigate his or her damages include Walsten v. Kinonjeoshtegon First Nation5, Ata v. Carter Pontiac Buick Ltd.6 and Evans v. Teamsters Local Union No. 31.7

  1. Cimpan v. Kolumbia Inn Daycare Society, 2006 BCSC 1828;
  2. Sinnathamby v The Chesterfield Shop Limited, 2016 ONSC 6966;
  3. Miller v. Gateway Co-operative Ltd. (1991), 35 C.C.E.L. 50 (Sask. Q.B);
  4. Hyland v. Advertising Directory Solutions Inc., 2014 ABQB 336;
  5. Walsten v. Kinonjeoshtegon First Nation, 2009 MBQB 106;
  6. Ata v. Carter Pontiac Buick Ltd., 2002 BCSC 531;
  7. Evans v. Teamsters Local Union No. 31, 2008 SCC 20, 2008 1 SCR 661;