The duty of wrongfully dismissed employees to mitigate their damages is no longer as clear-cut as it once was. Notice periods are seen as an amount of time, or a level of compensation, to assist a dismissed employee to find comparable work. Previously, lawyers made the assumption that any income gained by an employee during an employment notice period was to be automatically deducted from the amount an employee would be entitled to, due to the fact that the employee successfully mitigated the damages that their previous employer was responsible for. However, in Brake v PJ-M2R Restaurant Inc, the Court of Appeal declined to lessen the wrongful dismissal damages an employee was entitled to because of income earned from other employment during the notice period.

The employee, Esther Blake, was awarded more than $104,000 for a 20-month notice period due to wrongful dismissal. The defendant, PJ-M2R Restaurant Inc, is a holding company that owns franchised McDonald’s in the Ottawa area. Esther worked as a manager at one of the McDonald’s locations for 25 years until she was wrongfully dismissed.

While working at McDonald’s, Esther also worked a part-time job at Sobey’s as a cashier. When Esther was dismissed from McDonald’s, she continued to work at Sobey’s as she did before but expanded her hours there as she was no longer working full-time at McDonald’s. The Court of Appeal declined to see the Sobey’s employment as income from mitigation as she would have continued to work there part-time regardless of her status at McDonald’s.

Also of note is Court of Appeal Justice Kathryn Feldman’s concurring decision in this case. The lower court judge determined that $600 that Esther received from Home Depot during the notice period should also not be deducted as it was “so substantially inferior” to her managerial position at McDonald’s (para 24). While Justice Feldman did not use the same wording, she reiterated that employees are entitled to turn down jobs that are not comparable, without having the potential income from that job deducted for a failure to mitigate losses. Using that reasoning, an employee should not be penalized when they choose to accept the job that they were entitled to turn down. Justice Phillips of the Court of Appeal did not deduct this income either but stated it was due to the lack of clarity regarding the income.

The clear implication of this case is that employment lawyers will need to prove not only the amount of income an employee earned during the notice period but the nature of the work that income came from. With a changing economy and the rise of non-standard work, it will be interesting to see how the Court of Appeal treats mitigation efforts as comparable standard employment becomes more elusive.

Devry Smith Frank LLP is a full-service law firm that has experienced lawyers within our employee and employment law group. If you are in need of representation, please contact one of our lawyers today or call us directly at 416-449-1400.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”