September 22, 2017
Historically, a duty to mitigate applied in all wrongful dismissal cases. This meant that monies earned by an employee during the reasonable notice period were deducted from wrongful dismissal damages award. However, in Brake v PJ-M2R Restaurant Inc., the Ontario Court of Appeal did not deduct any monies from an employee’s damage award following her termination (despite her earning income during the reasonable notice period). This marks a significant shift in the principle that all income earned by an employee during the reasonable notice period can be deducted from a wrongful dismissal award.
The employee was a long-serving restaurant manager at a McDonald’s franchise in Ottawa. She also worked part-time at Sobey’s. The employer gave the employee an ultimatum that she accept a demotion to the position of “First Assistant” or be fired. The employee refused and her employment was terminated.
Following termination, the employee was only able to find work in positions that were “substantially inferior” to the managerial position she held with the employer. She eventually accepted a position as a cashier at Home Depot.
Using the historical principles regarding mitigation of damages, the employer submitted that:
The Court of Appeal disagreed with the employer on every count. Specifically, it found:
It remains to be seen whether Courts will apply this “substantially inferior” threshold when assessing the deduction of mitigation income. Nevertheless, the Court of Appeal’s decision in Brake will make mitigation submissions even more difficult for employers and will likely lead to larger damages awards in wrongful dismissal cases.
If you have any questions about this topic or any other questions relating to workplace law, please do not hesitate to contact a Mathews Dinsdale lawyer
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