Terminated employee has no obligation to seek lesser paying job: Ontario Court of Appeal

A terminated employee has the obligation to mitigate damages by seeking employment comparable to the position held at the time of dismissal, not lesser jobs, the Ontario Court of Appeal has ruled.

The respondent in Lake v. La Presse, 2022 ONCA 742, was a Montreal-based daily online French language newspaper that hired the appellant in August 2013. For five-and-a-half years, she was general manager and the Toronto division’s most senior employee. The respondent terminated her without cause after it decided to close its Toronto office.

The appellant received notice of termination on Mar. 25, 2019, and she stopped working for the respondent on Apr. 30. She conducted a job search but remained unemployed during the hearing of the summary judgment motion, which was two years after her dismissal.

The motion judge – citing Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.) – fixed the reasonable notice period at eight months, considering the appellant’s level of seniority, her duration of employment, her age at the date of dismissal, her work experience in management and sales especially in the media industry, and the case precedents. The judge reduced the notice period by two months to account for her failure to take reasonable steps to mitigate her damages.

The judge applied the test in Paquette v. TeraGo Networks Inc., 2016 ONCA 618 and concluded that the appellant would have been entitled to an annual bonus of $39,065. The judge awarded the appellant a total of $97,491.87, comprising damages for lost bonus and for wrongful dismissal, less the $40,026.22 that she already received from the respondent.

Damages need not be reduced for failure to mitigate

The Court of Appeal allowed the appeal and set aside the judgment. The appellate court based the damages for wrongful dismissal on a reasonable notice period of eight months, without the two-month reduction for failure to mitigate but including the reduction for the compensation that the respondent paid to the appellant over the notice period.

First, the appellate court ruled that the motion judge made no errors in concluding that the appellant unreasonably delayed the start of her job search. The judge was entitled to conclude that the appellant did very little to look for work until after June 3, 2019, the appellate court said.

Second, the appellate court held that the judge erroneously faulted the appellant for not applying for positions paying less than her previous role. The appellant had no obligation to seek out a lesser paying job, including by working as a sales representative, the appellate court explained.

Third, the appellate court determined that the judge erred by concluding that the appellant “aimed too high” when she applied for vice-president positions and focused her job search on roles representing a promotion over her prior role. The judge placed too much emphasis on the titles of some positions for which the appellant applied and failed to properly consider that these positions were similar to her previous work experience, the appellate court said.

According to the appellate court, the appellant provided substantial evidence of the steps that she took to mitigate her damages. Specifically, she claimed that she:

• searched for jobs on websites and online job boards almost daily
• used search keywords relevant to the job title range that she identified as potentially comparable
• made efforts to network
• attended one-on-one meetings and conferences
• used the career transitioning services that the respondent provided
• paid privately for additional coaching
• applied for 20 suitable positions

Lastly, the appellate court found no evidence that the appellant would likely find comparable employment if she applied for other positions and if she took reasonable and appropriate steps in mitigation.