As a general principle, employees who have been wrongfully dismissed have a duty to mitigate their damages by taking reasonable steps to secure comparable alternative employment. However, the onus is on the employer to prove a failure to mitigate and Courts have held that this onus is not easy to discharge. To do so an employer must show both that the employee failed to make reasonable efforts to find new employment, and that if the employee had made such efforts, new employment could have been found.
Notwithstanding this high burden, a recent decision by the Supreme Court of British Columbia is a rare example where an employer has succeeded in demonstrating a failure to mitigate, resulting in a reduced reasonable notice period.
Steinebach v. Clean Energy Compression Corp., 2015 BCSC 460, involved a 49-year-old employee who was terminated after 19.5 years of employment on a without cause basis. The plaintiff employee had started working for the defendant employer as a service technician in the compressed natural gas (CNG) industry and held a number of positions during his career. At the time of termination, the employee was the Vice President Business Development Canada, which was largely a sales position with no supervisory responsibilities but required specialized skills and knowledge of the CNG industry.
Taking into account the plaintiff’s age, length of employment, his degree of specialization and that for much of his employment the plaintiff held senior level positions that carried job duties with a high degree of responsibility and importance, the Court held that the plaintiff should be awarded 16 months notice.
The Court then turned to the issue of mitigation, specifically whether or not the plaintiff had adequately mitigated his damages by searching for reasonable alternative employment. The plaintiff’s evidence was that, after being terminated on May 2, 2014, he did not start his search for work in the gas or energy industry until mid-June 2014, and by the end of July 2014 had decided to pursue a career in financial management instead. Thereafter, the plaintiff focused on completing the Canadian Securities Course during August and September 2014, and was ultimately offered a Sales Assistant position at CIBC Wood Gundy in December 2014. The defendant filed responding evidence showing available employment opportunities it argued were similar to the plaintiff’s prior position.
The Court reviewed broad-ranging decisions on the issue of mitigation, including prior case law holding that an employee is entitled to a reasonable adjustment period before seeking reemployment, and that pursuing a new career can constitute proper mitigation even where the new career takes time to establish and has costs associated with retraining. Nonetheless, the Court held that the plaintiff failed to adequately mitigate his damages in this case. Specifically, the Court held as follows:
I am of the view that the plaintiff’s criteria were too narrow, that it would have been reasonable for him to make greater efforts to find new employment, and that if he had done more he would have likely achieved greater success in finding employment in the industry that he had spent the major part of his working life. In my further view, the plaintiff failed to pursue available opportunities that fell within his skill and experience, conducted too limited a job search, and placed a greater emphasis on his personal preferences and career objectives than was reasonable in all the circumstances.
Given this finding that the plaintiff had failed to adequately mitigate, the Court held that the plaintiff’s notice period of 16 months should be reduced by three months.
This case serves as an important reminder that while an employer’s burden of proving a failure to mitigate is very high and that an employee’s personal preferences are an important factor in assessing post-termination mitigation efforts, there are limits on what will be viewed as reasonable mitigation efforts by the Courts. In particular, where an employer can show that there were reasonable job opportunities available that the employee failed to pursue, the length of the notice period may be reduced.
Employers seeking to rely on an employee’s duty to mitigate to reduce their exposure following an employee termination should use this decision as a guide in terms of what types of evidence can be relied on to demonstrate a failure to mitigate.