When faced with a wrongful dismissal lawsuit from a former employee, one strategy employers use to reduce severance liability is to argue that the worker failed to mitigate her losses (i.e. by getting a new job). Traditionally, however, Canadian employment law has placed a heavy burden on an employer wanting to prove a failure to mitigate. The employer’s challenge has been to show that the former employee would in fact have found suitable alternate employment had she been diligent in her job search.
A 2016 decision from the BC Supreme Court, however, may be good news for employers wanting to use a mitigation defence to a wrongful dismissal claim. The ruling in Logan v. Numbers Cabaret Ltd. (Hamburger Mary’s) suggests that, in some cases, an employer’s legal onus may be reduced – by virtue of the post-employment behaviour of its former employees.
Robert Logan (age 56) and Kimberly Bocking (age 44) both worked for Hamburger Mary’s, a restaurant owned by Numbers Cabaret Ltd. (Cabaret), for approximately 18 years, as a cook and a waitress respectively. When the restaurant shut down for renovations in March 2015, both workers were laid off and given Records of Employment indicating an expected recall date of June 16, 2015.
Shortly after the restaurant closed, both employees applied for and received employment insurance benefits. Both continued to receive these benefits until at least the end of 2015.
The renovations took much longer than anticipated and, by the end of the summer, it was clear that the restaurant would not reopen in the near future. Cabaret did not recall the plaintiffs or pay them any severance.
In October 2015, Mr. Logan and Ms. Bocking sued Cabaret for wrongful dismissal.
At trial, the judge considered the plaintiffs’ length of service and ages, the character of their employment and the availability of similar work, and concluded that 14 months’ severance was an appropriate award for each of them.
Cabaret, however, argued that these awards should be reduced because the plaintiffs took no steps to find alternate employment and mitigate their damages. The employer provided the court with evidence of the abundance of employment opportunities for cooks and waitresses in the lower mainland during the relevant period, including newspaper articles and Statistics Canada data.
Ultimately, the court affirmed the general rule that the onus rests on the employer to demonstrate that, had the plaintiffs been diligent in looking for work, they would have found suitable alternate employment, and that this onus is a “heavy one”. However, the trial judge also held that before a court will consider whether this onus has been met, a former employee must nevertheless demonstrate that he/she has discharged his/her duty to look for work.
In other words, an employer does not have to prove that a former employee would have found suitable alternate employment if the former employee has failed to discharge his/her duty to seek out employment.
In response to the plaintiffs’ argument that the newspaper articles and statistics data were not admissible as evidence of alternate available work, the court also held that newspaper advertisements have “some evidentiary value” in proving that a discharged employee has ignored this duty.
As a result of the plaintiffs’ failure to mitigate, the court concluded that the appropriate award of damages was 7 months’ severance (from the date of their layoff to the start of their wrongful dismissal action). In making this significant reduction, the trial judge reasoned that the plaintiffs realized by the summer of 2015 that they would not be returning to work any time soon, and that any time they needed to “recover from any shock or upset” should not have extended beyond the commencement of this action on October 7, 2015.
The Logan case suggests that an employer’s burden to prove a failure to mitigate is not so heavy as to be absolute. Based on Logan, if an employer can show that a dismissed employee did nothing to seek alternate employment, the employer will not have to prove that the employee would have found suitable alternate employment if he/she had been diligent in looking for work.