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The Court of Appeal - The Court of Appeal

August 17, 2021

Ontario

,

Canada

Issue

If a terminated employee's immigration status prevents them from finding alternate employment in Canada, what constitutes reasonable mitigation of damages?

Conclusion

A dismissed employee is obliged to mitigate his damages by taking reasonable, not perfect, steps. Even if a defendant employer shows that an employee's efforts at mitigation were modest at best, if the employer fails to prove that the employee could have found similar employment by having acted with greater diligence, then the employer will not have discharged its burden and the employee will not be found to have failed to mitigate. A terminated employee is entitled to consider their own long-term interests and will not fail to mitigate merely by choosing to take some career risks that might not minimize the compensation that a former employer will owe to them. The mere fact that an employee did not apply for certain positions does not mean that reasonable efforts to mitigate were not made. In assessing an employee's mitigation efforts, the courts are tolerant and the employee need only act reasonably, not perfectly. (Celestini v. Shoplogix Inc.)

In Antonelli v. Fluor Canada Ltd., the plaintiff, an English engineer, was hired by the defendant to work in Calgary. The plaintiff obtained a one-year work permit that could be renewed. The plaintiff was terminated when the economy took a sharp downturn and the defendant failed to help him renew his permit. The defendant contended that the plaintiff had failed to mitigate his damages by refusing to accept an alternative, lesser offer of employment with one of the defendant's divisions in England. However, the Court ruled that there was no obligation on the plaintiff to accept a substantially lesser offer of employment. The plaintiff was entitled to search for employment that was comparable to his employment contract with the defendant. The Court ruled that the employee had made diligent efforts to find such employment.

In Kurtz v Carquest Canada Ltd., the plaintiff was an American citizen who worked for the defendant in California but transferred to Ontario after a promotion. The plaintiff was terminated after approximately two years of working in Canada. His visa only allowed him to work with the defendant in Canada. The Court ruled that the plaintiff had met his duty to mitigate. Despite his visa restrictions, he had initially made efforts for alternative employment in Ontario. When he was unsuccessful he returned to the United States and sought employment in several regions. The Court was satisfied that the search was not unduly restrictive and constituted a reasonable effort to find employment.

In Bruce v. Region of Waterloo Swim Club (H.C.J.), the plaintiff was a professional swim coach from California who was hired by the defendant, a swim club in Ontario. The plaintiff had to obtain a work permit in order to work in Canada. The defendant wrongfully terminated his contract and chose not to help him renew his work permit. The plaintiff returned to the United States and was successful in a claim of wrongful dismissal. The Court was satisfied that the plaintiff had met his duty to mitigate by pursuing various employment offers in the United States before accepting a position near his hometown.

In Scorpio Security Inc. v Jain, the plaintiff worked for the defendant as a security guard under a work visa. The plaintiff was terminated for cause and when he brought an action for wrongful dismissal the defendant revoked its support for his visa. However, in the days following his termination, the plaintiff was able to find a new job with another security company. This new company supported his visa. The Court stated that the plaintiff had "fully mitigated" his damages.

Law

In Celestini v. Shoplogix Inc., 2021 ONSC 3539 (CanLII), the Court reviewed the extent of an employee's duty to mitigate:

[83] It is well established that employees are legally obliged to mitigate the damages that flow from a wrongful dismissal by seeking an alternative source of income, absent an agreement that provides to the contrary or stipulates a fixed notice period: Bowes v. Goss Power Products Ltd.,2012 ONCA 425 at paras 24 and 34; Howard v. Benson Group Inc. (The Benson Group Inc.), 2016 ONCA 256 at para 44, leave to appeal refused 2016 CanLII 68016 (SCC). Here, the Defendants have the onus to prove that Mr. Celestini failed to mitigate his damages: Samuel v. Benson Kearley IFG,2020 ONSC 1123 at para 78. As the Supreme Court has stated, this is not a light burden:

[T]he burden which lies on the defendant of proving that the plaintiff has failed in his duty of mitigation is by no means a light one, for this is a case where a party already in breach of contract demands positive action from one who is often innocent of blame.
Red Deer College v. Michaels
, [1976] 2 S.C.R. 324at 332.
In effect, to discharge this burden, an employer must show that the employee did not attempt to take reasonable steps and could be expected to have secured not just a position but a comparable one reasonably adapted to his abilities had his job search been active:
Samuel at para 78, citing You v. Canada Kitchens Ltd., 2009 CanLII 9412 (ONSC) at para 16; Link v. Venture Steel Inc., 2008 CanLII 63189 (ONSC) at paras 45-46. An employer must show that the employee's conduct was unreasonable, not in one respect, but in all respects: Furuheim v. Bechtel Canada Ltd., [1990] OJ No 746 (CA) at para 3.

[84] Ultimately, a dismissed employee is obliged to mitigate his damages by taking reasonable, not perfect, steps. Even if a defendant employer shows that an employee's efforts at mitigation were modest at best, if the employer fails to prove that the employee could have found similar employment by having acted with greater diligence, then the employer will not have discharged its burden and the employee will not be found to have failed to mitigate: Rothenberg v. Rogers Media Inc.,2020 ONSC 5853 at para 51; Day v. JCB Excavators Limited,2011 ONSC 6848 at paras 109–110. A terminated employee is entitled to consider their own long-term interests and will not fail to mitigate merely by choosing to take some career risks that might not minimize the compensation that a former employer will owe to them: Brake v. PJ–M2R Restaurant Inc., 2017 ONCA 402 at para 94; Peet v. Babcock & Wilcox Industries Ltd.(2001), 53 OR (3d) 321 (CA) at para 8. The mere fact that an employee did not apply for certain positions does not mean that reasonable efforts to mitigate were not made: Ibid. In assessing an employee's mitigation efforts, the courts are tolerant and the employee need only act reasonably, not perfectly: Cormier v. 1772887 Ontario Limited c.o.b. as St. Joseph Communications,2019 ONSC 587 at para 69.

In Bruce v. Region of Waterloo Swim Club (H.C.J.), 1990 CanLII 6684 (ON SC), the plaintiff, an American citizen, was a professional swim coach and entered into a one-year contract with the defendant, an Ontario based swim club. To work in Ontario he obtained a one-year work permit from the Federal Government. Nearing the conclusion of his one-year term, the defendant's board decided not to renew his contract and chose not to help the plaintiff secure a new work permit. The plaintiff returned to the United States and later successfully brought an action for wrongful dismissal. The Court was satisfied that the employee had fulfilled his duty to mitigate by pursuing various employment opportunities in the United States:

Mitigation

After completing his contract the plaintiff moved to Wooster, Ohio. He sent letters and made phone calls to various persons in the swimming community. He went to Los Angeles and from September 15-19 to Las Vegas to a national coaches' convention to pursue leads. It was a difficult time of year since the normal hiring season is May, June and July. He did not get employment there. On September 30 he was offered employment at the Y.M.C.A. in Wooster as aquatic director at a salary of $16,000 (U.S.) (approx. $21,000 in Canadian funds) per year. This was a sharp drop from the $37,000 contemplated by the 1987 contract and counsel for the club was critical of the plaintiff's efforts and of the scanty evidence of the job search. The evidence is rather thin but on balance I find the plaintiff acted reasonably in accepting the Y.M.C.A. job. He had not found any head coaching jobs open and while he had inquired about some assistant's jobs, none had materialized. The job was in his home town which minimized further moving expense. The hiring season was past for the national level jobs. I see no basis for reducing his damages for failure to mitigate.

In Antonelli v. Fluor Canada Ltd., [1984] A.W.L.D. 840, [1984] A.W.L.D. 841, the plaintiff was a British Citizen and signed a two-year contract with the defendant, a Calgary-based engineering firm. The position was contingent on the plaintiff obtaining a work permit, which he secured with the help of the defendant. The permit was for a period of one year with the possibility of renewal. Several months into his contract, the plaintiff was terminated when the economy took a sharp downturn and the defendant did not seek an extension of his work permit. The plaintiff successfully brought an action for wrongful dismissal. The defendant contended that the plaintiff had failed to mitigate his damages by refusing to accept an alternative, lesser offer of employment with one of the defendant's companies in England. The Court disagreed and ruled that the plaintiff had met his duty to mitigate:

[19] The real question in this case if whether the plaintiff did all that could reasonably be expected of him to mitigate his damages. Counsel for the defendant strongly argued that the plaintiff's failure to accept the offer by Fluor Ocean Services, and his failure to attend at Fluor Ocean Services in England establishes that the plaintiff acted unreasonably. On the other hand, counsel for the plaintiff argues that there was no obligation on the plaintiff to accept a substantially lesser offer of employment which contained several provisions objectionable to the plaintiff. I must agree. The plaintiff was in my view entitled to search for employment which was comparable to his employment contract with the plaintiff. I find that he made a diligent effort to find such employment. The defendant's own evidence is that the offer from Fluor Ocean Services, which the latter company never made directly to the plaintiff, was not available after October 1, 1982.

[20] In the case of Yatton v. Eastwoods Froy Ltd. (1966) 3 All E.R. 353. Blain J. held that a dismissed employee was entitled to refuse an offer of employment which involved a reduction in status. It was held there that the plaintiff did not act unreasonably in seeking comparable employment to that of his previous employment. I am in agreement with the principles discussed in that decision, and in particular the following from p. 362 which I find particularly pertinent:

...The basic principle of damages is restitution in integrum: the plaintiff should have what he has lost through the defendants' fault; but, of course, if a plaintiff in fact, in the case of a contract of service, earns something elsewhere through being at liberty so to do, then he has lost that much less as the consequence of the default. Moreover if he can minimize his loss by a reasonable course of conduct, he should do so, though the onus is on the defaulting defendant to show that it could be, or could have been, done and is not being, and has not been, done. Thus, the opportunity to reduce damages by finding reasonable (I repeat reasonable) alternative employment, should be taken and, indeed, sought, whether such employment is by the same defaulting employer or by someone else; in either case the test being whether its reasonable to refuse it or not in the circumstances of each case.

(See also Shendlar v. Northern Ramcost Co. Ltd. (1960) 2 All E.R. 239: Thiessen v. Leduc (1975) 4 W.W.R. 387 (Alta. Supreme Court): Dupleses v. Irving Pulp and Paper Ltd. et al (1983) 1 C.C.E.L. 196: Michaels et al v. Red Deer College (S.C.C.) 5 N.R. 99)

[21] The peremptory manner in which the final offer was extended to the plaintiff's solicitors, that is to say three or four days before the suddenly imposed deadline for acceptance on October 1, 1982, at a time when the plaintiff's solicitors were unable to contact him, brings into question the bona fides of the offer. I find that the plaintiff made every reasonable effort to obtain other employment and to mitigate his damages. He did obtain employment on April 5, 1983.

In Kurtz v Carquest Canada Ltd., 2015 ONSC 7997 (CanLII), the plaintiff was an American citizen who initially worked for the defendant in California, but transferred to Ontario after a promotion. The employee was terminated after approximately two years of working in Canada. His work permit only allowed him to be employed in Canada with the defendant. Despite his visa restrictions, he attempted to find work in Ontario but was unsuccessful. The plaintiff returned to California and began to search for positions there. The Court was satisfied on the evidence that the plaintiff had made reasonable efforts to mitigate his damages:

[99] Faced with the breach of his employment contract by the defendant, the plaintiff was legally as well as practically obligated to attempt to minimize his damages by finding reasonable alternative employment. The onus of proving a failure to mitigate lies with the defendant.

[100] In this case, Mr. Kurtz initially made efforts to find alternative employment in Ontario which, despite his visa restrictions, was reasonable since a new job locally would have avoided the need for relocation back to the United States. In fact, he had been interviewed for a position in Canada on four occasions in December 2010, the month prior to his termination.

[101] The plaintiff's main effort at finding jobs was through Internet searches, mainly through a review of job boards online. He paid monthly fees to be a part of three or four of them, and also contacted people with whom he went to business school. Exhibit 26 consists of about 250 pages of printouts in relation to online postings or applications between January 24, 2011 and November 2, 2011.

[102] The job search was focused on California since he intended to move back there to be closer to family. After his return to California, he testified he had several interviews for distribution center jobs including warehouse management and supervisory positions.

[103] Mr. Kurtz gave evidence that he did not restrict his search by industry or geographical location, except that he did choose not to pursue potential opportunities in Las Vegas, Nevada and Baltimore, Maryland since he felt those locations were not appropriate for his family. He did not apply for jobs that were expected to generate income of $35,000 per year or less. In September, 2012, Mr. Kurtz went into the insurance business as a sales agent.

[104] The defendant takes the position that there was a lack of effort demonstrated by the Internet searches and notes the failure to pursue the Baltimore and Las Vegas opportunities.

[105] The defendant notes that Mr. Kurtz had an overlap between employment insurance benefits in Canada and unemployment insurance benefits received in the United States. It submits that Carquest should receive a credit of $27,000 mitigation income being the amount of US benefits received.

[106] Based on the evidence provided by the plaintiff, I am satisfied that reasonable efforts were made to find alternative income. It does not appear that the search was unduly restricted, and I do not find fault with the plaintiff's failure to follow through on two possible opportunities.

[107] No evidence was led about the impact of a wrongful dismissal award in Ontario on unemployment insurance received in the United States. It may well be that a repayment obligation will exist as is the case in Canada. It may also be that the calculation of such an overpayment, if required, will be reduced by virtue of the total length of unemployment. Faced with those uncertainties, I am not prepared to credit the defendant for US unemployment insurance benefits received by the plaintiff as equivalent to mitigation income.

[108] Therefore there will be no reduction in the damage award based on alleged failure to mitigate.

In Culbertson v. O.D.C. Exhibit Systems Ltd., 1996 CanLII 8502 (BC SC), the plaintiff moved from California to British Columbia to accept a position with the defendant. She was terminated after 10 months of employment and brought a claim for wrongful dismissal. The Court summarized the plaintiff's mitigation efforts:

Mitigation

[11] Following her termination the plaintiff made enquiries for alternative employment. One position was available but it would have meant another move, this time across the continental United Sates where there was a military display facility. The plaintiff chose not to follow up on this prospect. She was able to obtain short term employment in California after a period of nine months unemployment and a position as a temporary for year and a half but that agency went out of business. She remained unemployed until June 1993 when she obtained another temporary position and since then she has been doing consulting wok and working as a temporary on an on call basis.

In Scorpio Security Inc. v Jain, 2018 BCSC 978 (CanLII), the plaintiff came to Canada on a student visa before getting a job with the defendant as a security guard and obtaining a work visa. The plaintiff was fired for cause and when the plaintiff brought an action for wrongful dismissal, the defendant revoked its support for his visa. However, almost immediately after his termination, the plaintiff had been able to get a new security job with another company. This new company supported his visa which allowed him to remain in Canada. The Court stated that the plaintiff had fully mitigated his damages:

[26] Nonetheless, Amandeep testified that the problems with Mr. Gill were the final straw. He said that the defendant was given no more shifts after February 23, 2016, and a termination letter was delivered on March 5, 2016. The defendant disputes receiving this letter, but does agree that he received a follow-up email on April 1, 2016 that referenced his dismissal. He says that his last scheduled shift was March 7, 2016. The defendant took steps in March to find work with another security company, and continued his work at Walmart. He says he spoke with Narinder and Amandeep on April 20 or 21, 2016, but they would not reconsider the decision to let him go.

[27] In September and October 2016, around the time that this litigation commenced, the plaintiff advised the immigration authorities that the defendant’s employment had been terminated, and revoked its support for the defendant’s PNP application. However, it appears that his work for the new security company was sufficient to keep him on his immigration path, and he remains in Canada.
[...]

[58] Although I find that the plaintiff has not established just cause for the defendant’s dismissal, the defendant agreed that there is no traditional notice period claim possible here, given that he was able to completely mitigate his damages by obtaining other work in the relevant period following his dismissal.
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