Termination will normally entitle a dismissed employee to compensation (either reasonable notice of the termination or pay in lieu of that notice).
The general principle behind this compensation is to provide the employee with adequate time or compensation to search for a new job. Where the employee does not believe they have received adequate notice or compensation, they may sue their former employer for wrongful dismissal.
It is important to note that an employee’s right to compensation is not unconditional. An employee claiming reasonable notice compensation must attempt to mitigate their damages by seeking comparable work. This means that an employee cannot claim damages for loss of employment if they do not actively try to find new employment.
However, what if an employee, rather than seeking employment, decides to go back to school to retrain in a new career or improve their skills?
A recent decision provides some caution to employees considering taking such a path. In that case, the Ontario Superior Court decided that an employee had failed to mitigate his damages by choosing to go back to school rather than pursuing job opportunities in his field of work.
The plaintiff brought an action against his former employer, the defendant Cascades Canada ULC (Cascades), seeking 24 months’ common law notice, minus the 34 weeks’ pay he had already received from Cascades under the Ontario Employment Standards Act following his termination.
Cascades argued that plaintiff had failed to reasonably mitigate his losses upon his termination.
The plaintiff had worked for the defendant for 28 years as a line operator until he was terminated without cause, in 2016, along with 41 other employees due to downsizing.
Cascades offered the plaintiff a severance package, which he refused. Consequently, they gave him pay in lieu of notice of termination, which totalled an amount equivalent to approximately 8 months of salary.
Following his termination, Cascades actively assisted the plaintiff by providing job search assistance, as well as pointing him towards comparable job openings within Cascades itself.
However, the plaintiff instead decided it was time to switch careers and attend a welding training program to retrain as a skilled labourer. He therefore enrolled in the 6-month “Welder Fitter” program at The Institute of Technical Trades, which he successfully completed nine months after his termination. He subsequently filed his legal claim against his former employer.
Issues and Decision
The judge stated that the primary issue at hand was whether Cascades has met its onus to establish that the plaintiff had failed to reasonably mitigate his losses upon his termination.
Cascades submitted that the plaintiff’s decision to retrain was not reasonable, and that choosing to pursue a new career and not consider comparable employment equalled a failure to mitigate his damages. The judge agreed.
The judge stated that the onus of proving a failure to mitigate fell upon the employer under the test established by Supreme Court of Canada in Michaels v. Red Deer College . Under the test, the employer is required to establish that: (a) the employee did not take reasonable steps to seek comparable employment, and (b) if the employee had done so, the employee could have procured such comparable employment.
Ultimately, the judge found that the plaintiff had failed to mitigate his damages by choosing to retrain rather than pursue comparable employment. While the judge stated that: “[a] decision by a terminated employee to seek retraining is not, on its own, a basis for an employer to submit that the employee failed to reasonably mitigate damages”, he nonetheless found that in this particular case “a decision to retrain and not seek out the comparable opportunities does not constitute reasonable mitigation.”
The judge therefore determined that the plaintiff’s entitlement to damages ended when he began his welding training program and dismissed the case.
As the judge stated, retraining or pursuing further education will not necessarily result in a finding that the employee failed to mitigate damages. However, as seen in this case, returning to school may result in a loss of compensation rights if the employer can prove that the employee did not pursue comparable employment opportunities.
The team of knowledgeable Toronto employment lawyers at Mallins Law regularly advises employers and employees on a broad range of common legal issues related to employment, including on issues of termination, wrongful dismissal, and related matters. For more information, or to schedule a consultation, contact us online or by phone at 647.792.0310.