Thinking of Arguing Failure to Mitigate? Recent Decision May Prompt Employers to Say, "Why Bother?"

A recent decision of the Ontario Court of Appeal, reversing a trial decision on failure to mitigate, may have employers questioning if mitigation is truly a "duty".

In Lake v. La Presse, the plaintiff was the General Manager of an online daily French language newspaper. She was terminated without cause after 5 1/2 years, when the Company closed its Toronto office, and she was given a little over 2 months' working notice of dismissal. She sued for wrongful dismissal. On a summary judgment motion, the judge determined that she ought to have received eight (8) months' notice, based on the Bardal factors, but then reduced the award by two (2) months on the basis that she had not made adequate or reasonable efforts to mitigate her losses. The employee appealed.

The Ontario Court of Appeal overturned the motion judge's ruling with respect to failure to mitigate. While the judge had applied the correct test (i.e., "first, whether the appellant took reasonable steps, and second, if such steps had been taken that she would likely have obtained comparable employment") and recognized that the onus of proving insufficient mitigation was on the employer. However, the motion judge's reasons for finding that she had not made appropriate efforts were rejected as constituting an error of law. At para. 7, the Court set out the motions judge's reasoning:

... The motion judge concluded that the steps taken by the appellant to mitigate her damages were not reasonable in the following ways: (a) she waited too long before beginning her job search; (b) she “aimed too high” in applying for vice-president roles and she should have been applying for less senior roles if she continued to remain unemployed; and (c) she waited too long before applying for any jobs and she applied to very few jobs.?

He also inferred that other, more junior positions that the plaintiff could have applied for existed (based only on the fact that there were VP positions available), despite the absence of any evidence from the employer on this point.

While the Court agreed that the appellant had delayed in starting her job search, as found by the motions judge, it upheld the appellant's other grounds for challenging the motions judge's decision. At para. 19, the Court stated:

...The obligation of a terminated employee in mitigation is to seek “comparable employment”, which typically is employment that is comparable in status, hours and remuneration to the position held at the time of dismissal: Carter v. 1657593 Ontario Inc., 2015 ONCA 823, at 2022 ONCA 742 (CanLII) para. 6. There was no obligation for the appellant, to seek out less remunerative work, including by working as a sales representative.

On the other hand, the Court also found (at para. 21):

The motion judge also made a palpable and overriding error when she concluded that the appellant aimed too high when she applied for vice-president positions and had focused her job search on roles that would represent a promotion over her prior role.?

The Court went on to explain:

In my view, the motion judge placed too much emphasis on the titles of some of the positions the appellant applied for, without giving proper consideration to the appellant’s evidence that the positions were similar to her prior work experience. Without evidence contradicting the appellant’s assertion that the vice-president roles had similar job responsibilities to her previous employment, the motion judge speculated, based on the title of the positions alone, that such positions were not comparable. This error influenced her determination that the appellant failed to take reasonable steps to mitigate her damages.

Moreover, the Court observed that the onus of proof was on the employer: "In this case, the respondent offered no evidence to counter the appellant’s evidence that the vice-president positions had similar job responsibilities to her previous employment, and that opportunities in the industry at the time were limited" (para. 27).

Finally, the Court was of the view that the motions judge had relied on inferences that were not supported by evidence when he found that, had the plaintiff not limited her job search in the manner that she did, "her chances of obtaining a position would have improved significantly" (cited at para. 29). It was for the employer to establish, by proffering evidence, that there was some causative connection between the lack of mitigation effort and the failure to reduce her damages. As there was no evidence to support the conclusion that she would probably have found other work by changing her job-search strategy, this finding was not justified. While an inference might be appropriate, where it was supported by the facts (such as the case where an employee readily found another position in a short time), this was not the case. Moreover, the inference that her chances would have been greater did not satisfy the second stage of the test, which required evidence that the employee would have found another comparable position.

In the result, the reduction for failure to mitigate was removed and the appellant was found to be entitled to 8 months' notice.

For employers, the decision simply underlines the challenges of satisfying the test for failure to mitigate. An employer making such an argument has the Herculean task of not only proving that the employee's efforts were unreasonable and inadequate (which does not include focusing solely on jobs at or above the employee's current level), but it has to be shown that more effort would have landed one of those comparable positions. In a highly competitive job market, there can be many reasons why a candidate would not succeed in obtaining a particular role, even if they were qualified for the position. Now it seems that the employer must be able to see just which jobs an employee would have obtained. For most employers, the bigger decision will be whether to argue a lack of mitigation effort at all.

Does your organization need assistance with employee terminations or demands? Contact Lance @ceaserworkcounsel.ca for expert guidance.

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Operating as Ceaser Work Counsel since early 2014, Lance Ceaser is a 19+ year management-side labour and employment lawyer operating from London, Ontario, where he resides with his lovely spouse, a dog and 2 cats. Lance has provided timely, cost-effective advice to organizations of all sizes in virtually every sector of industry and the public sector throughout his career.