Page 42 - Best Magazine Summer Edition 2017

ECONOMÍA Y FINANZAS
THE DUTY TO MITIGATE WRONGFUL DISMISSAL DAMAGES
Normally, an employee who is hired for a fixed term of employment (e.g., 2 years) will be entitled to sue for
compensation over the full term of employment, if the employer terminates early without “just cause” (e.g., after one year). Moreover, such an employee will be able to find a job over the second year and be entitled to keep both sources of income (i.e., the new employment income and the damages award).
Where the employment contract is not for a fixed term, however, normally a wrongfully dismissed employee has the duty to try to mitigate her damages flowing from the dismissal by making reasonable efforts to obtain a job “reasonably comparable” (in terms of financial compensation and responsibility) to the one lost. The thinking is that a wrongfully dismissed employee should not receive compensation for “damages” that she could have avoided by working (although an employee is not obliged to accept a job offer that is significantly inferior).
If the employee gets a comparable job during the “period of reasonable notice” (which is the period of time for which the dismissing employer is liable), some of this new income may be subject to deduction from a damages award. However, it is the dismissing employer who has the burden of establishing both that the employee breached the duty to mitigate (e.g., by failing to look for a new job hard enough or by turning down a job offer that should have been accepted) and/or succeeded in receiving deductible new income.
A recent decision from the Court of Appeal for Ontario, Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402, dealt with some of the wrinkles that can arise. The employee in that case already had a part-time job before she
BY GUILLERMO SCHIBLE
was fired from her full-time job. So naturally, afterward she worked more hours at her part-time job, and her income there increased significantly. The court did not deduct any part of the income received from the part- time job. Query whether the result will always be the same.
Next, the court stated that (new) income earned during the statutory “entitlement” period (which covers the statutory notice period and the period of statutory pay, if applicable) is not subject to deduction. Prior cases had said this applied to the statutory “notice” period.
The most interesting part of the decision, however, relates to an issue that remains unclear, and that is whether employment income earned from a “significantly inferior” position reduces wrongful dismissal damages. One of three judges stated that it should not. The majority did not deduct the employment income at issue, but only on the ground that it was “unclear” whether the income was earned during the statutory entitlement period or during the subsequent common law notice period. The dismissing employer must prove that the subject income was earned during the common law notice period to benefit from a reduction; this employer failed to do so.
42 THE BEST MAGAZINE WINTER 2016 - 2017
ECONOMY AND FINANCE
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