The Quebec Court of Appeal recently overturned a judgment of the Superior Court that had granted an ex-general manager of a car dealership pay in lieu of reasonable notice of termination equivalent to 12 months of his annual salary, but halved because the failure of the employee in respect of his obligation to mitigate its damages.
According to article 1479 of the Quebec Civil Code, a person who is liable to redress for an injury is not liable in respect of any aggravation of the injury that the victim could have avoided. An employee that is dismissed must thus make a reasonable effort to find a new job and should not refuse any reasonable offer of employment even if it is made by the same employer who dismissed him (see on this subject, the Supreme Court of Canada Evans. v. Teamsters Local Union No. 31, 2008 SCC 20). An employee who has been dismissed who fails to meet this obligation runs the risk of having the claim for compensation reduced by a Court.
In this case, the employer argued successfully before the Superior Court that the ex-general manager had not fully satisfied his obligation to mitigate the damages that he suffered, as a result of the time that elapsed between his termination date and the beginning of his search for new employment (ten (10) weeks), the number of resumes that he sent (twenty), the fact that he did not use the contacts that he had in the field in which he worked, that he limited his search to the region in which he lived, and that it took him much longer to find a job (approximately 11 months) than another employee who resigned during the same period. The efforts of the former ex-general manager to find a new job were deemed insufficient, resulting in a halving of the indemnity that he was owed in lieu of reasonable notice of termination.. The Superior Court was of the opinion that the employee had no obligation to accept the position of body shop director offered by his former employer as it would have been embarrassing and humiliating for him to return to work in such circumstances.
Dissatisfied with the judgment, the employer appealed the decision, alleging that the Superior Court erred in law in finding the employer and one of its directors and shareholders jointly and severally liable to pay the damages.
Using a cross-appeal, the employee called for an increase of pay in lieu of reasonable notice of termination due to the bad faith of the employer at the time of dismissal. The Court of Appeal rejected both arguments.
The Honorable Mr. Justice André Rochon, writing for the Court of Appeal, concluded that the Superior Court had imposed on the employee a duty to mitigate that was too onerous and that went beyond what was fair and in the circumstances. The judge stated that a Court cannot blame an employee who has more than twenty years of service for having waited ten (10) weeks before starting his employment search. In addition, it is obvious that the holiday season was a challenging time to conduct an employment search. He adds that "[...] the obligation to mitigate these [sic] damage is an obligation of means and not an obligation to take every imaginable measure to get there." (free translation) The indemnity that the employee received was thus reduced only by one month (rather than 6 months).
With respect to the personal liability of a director of the company, the Court of Appeal confirmed that he had committed an fault by authorizing the payment of a dividend equal to the net proceeds from the sale of the company, a decision that benefited the director, who stripped the company of its assets while the claim of the former employee was still in dispute. Without it being necessary to pierce the corporate veil, Mr. Justice Rochon confirmed that the personal fault of the director was sufficient to incur a non-contractual liability under Section 1457 CCQ.