October 14, 2016 By: Christopher C. Rootham

Mitigating your losses after being dismissed, such as making concerted efforts to find new employment, is important if you feel that the dismissal was unjust. However, a recent case has demonstrated that contextual factors do come into play when a court is evaluating the extent to which an employee has attempted to mitigate.

In Maasland v. Toronto (City), the employee joined the City of Toronto in 1989. She held progressively senior positions that involved project management in the field of intelligent transportation systems, until she was promoted to the position of Senior Engineer in the Transportation Management Centre in 1999. In 2014, the City reorganized that Centre. The employee was transferred from one unit within the Centre to another. While her compensation, title, and location remained the same, her duties changed substantially from mainly operational to mainly administrative. The City announced this change on the same day that the employee received a watch acknowledging her 25 years of service.

The employee did not work after April 16, 2014 (starting with vacation and other paid leave, and then unpaid leave), and claimed she was constructively dismissed. The City terminated her employment on December 15, 2014. The employee brought an action for wrongful dismissal, and the City defended.

The first point of interest in this case was that both parties agreed that the action – including the allegation of constructive dismissal – could be resolved by way of summary judgment. The motions judge allowed the action, concluding that the change in positions was a “substantial” change and, consequently, a constructive dismissal. That particular finding was not appealed by the City.

The motion judge went on to conclude that the appropriate notice period was 26 months. The motion judge referred to the Supreme Court of Canada’s decision in Wallace v United Grain Growers to the effect that 24 months’ notice is “at the high end of the scale”, but then stated that there had been “some notice inflation since Wallace” and, therefore, the appropriate notice period was 26 months.

The City appealed on issues related to mitigation. First, the City argued that the employee should have mitigated her losses by continuing to work for the City in the new role. The Court of Appeal rejected that argument, given the ample evidence before the motion judge that the new job was “humiliating” and that her relationship with the City had been “irreparably damaged.”

Second, the City argued that the employee failed to mitigate because she refused to seek work outside of Toronto. The employee decided not to apply for a job opening in York Region, roughly 50km from her home. The Court of Appeal agreed with the motion judge that the failure to apply for this one job did not mean the employee had failed to take reasonable steps to mitigate her losses.

Third, the City argued that the employee’s only reason for failing to seek other work was the scheduling of a criminal trial dealing with the murder of her brother. Aside from the gross insensitivity of this submission by the City, the Court of Appeal agreed with the motion judge that there was “no convincing evidence” to support the City’s suggestion; in any event, “there is absolutely nothing wrong with the respondent, dismissed from a 25-year position at age 58, including planned attendance at the trial relating to the murder of her brother as a contextual factor in her search for a new position.”

Some short takeaways from this case:

  1. 26 really is the new 24 (with apologies to Sean Bawden).
  2. An employee is not expected to mitigate a constructive dismissal by continuing to work when doing so would be humiliating.
  3. An employer needs strong evidence in order to demonstrate that an employee has not tried hard enough to find new work before alleging a failure to mitigate.

If you have further questions about mitigating your losses following a dismissal, contact our Employment Law Group.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2018 Nelligan O’Brien Payne LLP.

Service: Employment Law