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Bulletin | The HR Space

An Employee’s Failure To Mitigate Results In A Discounted Award For Notice

Fasken
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Overview

Labour, Employment & Humans Rights Law Bulletin | HR Space

Whether an employee took reasonable steps to mitigate his wrongful dismissal damages was recently reviewed in the Supreme Court of British Columbia decision Moore v. Instow Enterprises Ltd., 2021 BCSC 930. The 53-year-old employee, a commercial sales representative, with approximately 26 and a half years of service, was awarded twenty months of reasonable notice under the common law. However, this award was reduced by three months for the employee’s failure to reasonably mitigate his losses.

The employee was terminated without cause when the employer suffered a significant downturn in its business due to the global COVID-19 pandemic. As there was no written employment contract, the employee was entitled to reasonable notice based on the common law.

The employee submitted that he was entitled to 24 months’ of notice based on his age, position, length of service and the COVID-19 pandemic. The employee argued that he should be treated as a management level employee based on his responsibilities, which included audits, coaching and mentoring staff, budgeting, and participation in the hiring process.  The employer argued that the employee’s participation in hiring and mentoring was a reflection of the company’s culture and that the employee did not directly supervise any employees.  The trial judge found that the employee’s position was that of a senior salesperson, and based on the relevant factors, including his age and years of service, the employee was entitled to 20 months’ notice.

Terminated employees are expected to mitigate their damages by taking reasonable steps to actively search for alternative employment.  Mitigation efforts must be reasonable, but not perfect. The obligation involves “more than creating a resume and conducting computer searches”. The court provided the following guidance regarding an employee’s mitigation efforts:

  • Do not limit a job search to exactly the same or nearly identical position. Instead, review and assess one’s experience and skills to determine how they can be transferred to other industries or areas. The goal is to seek reasonably comparable employment, which can include jobs in other industries or jobs with different tittles but similar skills sets and experience.
  • When searching for alternative employment, one must take active steps to search for reasonably similar employment including:
    • Reaching out (by phone or email) to potential employers or contacts within relevant industries;
    • Writing cover letters that outline why one qualifies for a position;
    • Following-up with hiring managers after submitting an application for an open position; and
    • Using head hunters or recruitment agencies to search for available employment.

In this case, the employee limited his search to nearly identical employment in the same industry. Other than creating a resume and applying to these select positions, the employee did not take any other steps to find alternative employment.  The court found that the employee failed to proactively search for alternative employment. In light of this failed effort, the court reduced the notice period by three months.

This case is a good reminder of an employee’s obligation to take active steps to reasonably mitigate their damages in a case for wrongful dismissal. Employers should request all relevant evidence supporting an employees’ mitigation efforts including a list of jobs searched and applied for, detailed records of any follow-ups and opportunities pursued beyond an online application.  As this case illustrates, damages may be reduced if an employer is able to establish that the employee failed to take reasonable and proactive steps to mitigate their damages. 

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