Diagnosable Psychological Injury Not Required for Award of Aggravated Damages: ONCA

Can a ‘little white lie’ about the reason for an employee’s termination of employment result in an award of aggravated damages? What if the employee is unable to demonstrate a diagnosable psychological injury?

In Krmpotic v. Thunder Bay Electronics Limited, 2024 ONCA 332, the Court of Appeal for Ontario held that mental distress is a broad concept; it includes a diagnosable psychological condition arising from the manner of dismissal but is not limited to that. In the Court of Appeal’s assessment, “There is a spectrum along which a person can suffer mental distress as a result of the manner of dismissal.”

It just got considerably easier for employees to obtain aggravated damages from the manner of dismissal.

“Lowered Expectations” – Catchy Sketch Comedy Jingle, Bad Legal Principal

Those of us of a certain age will remember a sketch comedy television series originally inspired by Mad magazine that aired on Fox from 1995 to 2009 called “MADtv”. Among the recurring sketches on MADtv was a segment called “Lowered Expectations”, which spoofed dating videos.

The title “Lowered Expectations” poses a relevant employment law question: Does a dismissed employee have a legal duty to mitigate her damages by searching for a lesser paying job after a reasonable period of time has passed looking for a more comparable position?

Just as it is true that no one should have to lower their expectations in looking for love, in Lake v. La Presse, 2022 ONCA 742 (CanLII), the Court of Appeal for Ontario (van Rensburg, Pardu and Copeland JJ.A.) held that a motion judge had erred in principle when she accepted that, in mitigation, after a reasonable period of attempting to find similar employment, a dismissed employee must begin searching for a lesser paying job.

Sorry if you now have the theme song stuck in your head.

Court Relies on Wage Surveys to Impute Income

Can the court rely on wage surveys to impute income to someone who has refused to provide evidence of his actual earnings?

In Lewis v. Willis, 2022 ONCJ 421 (CanLII), a family law decision of Justice Stanley B. Sherr of the Ontario Court of Justice held that it could.

The case may have implications in employment law cases, where dismissed employees fail or refuse to provide evidence of their mitigation income.

Court of Appeal Confirms it Can be Reasonable to Refuse New Employment if New Position is Not Comparable to Position Lost

Is it reasonable for an employee, slated to lose his or her employment as a result of the sale of part of his or her company, to refuse an offer of new employment with the purchaser of the business?

In Dussault v. Imperial Oil Limited, 2019 ONCA 448, the Court of Appeal for Ontario confirmed that it is reasonable if the new position fails to be comparable in status, hours and remuneration.

Twenty-Six Months’ Notice Awarded to Employees Who Rejected Offer of Continued Employment

Is an employee who is slated to lose his or her employment as a result of the sale of part of his or her company required to accept an offer of employment from the purchaser, if that offer of employment is on substantially less favourable terms?

If the employee reasonably rejects that offer, then what is the maximum amount of ‘severance’ to which a wrongfully dismissed employee can be entitled? While many will tell you that 24 months is the most a court will ever award for reasonable notice, as this blog has noted on more than one occasion, see e.g. What is the Maximum Amount of Reasonable Notice Under Ontario Law? and Is Twenty-Six the new Twenty-Four? Taking the 'Cap' off the Limit on Reasonable Notice, and as the Honourable Justice Lois Roberts (now of the Court of Appeal for Ontario) said in the case of Hussain v. Suzuki (2011), 209 A.C.W.S. (3d) 101 (ON SC):

There is no cap on the amount of reasonable notice of employment termination to which an employee may be entitled.

On February 20, 2018, the Ontario Superior Court of Justice in its decision in Dussault v. Imperial Oil Limited, 2018 ONSC 1168, once again confirmed that there is no such thing as a “hard cap” at 24 months and took a good, hard look at the obligations of an employee to mitigate his or her damages by accepting a substantially less lucrative offer of employment from the purchaser in an asset sale arrangement.

Court of Appeal Rules that Modest Earnings Earned during Notice Period Not to be Deducted from Wrongful Dismissal Damages

What happens when an employee takes a new job not so much to mitigate her damages, but rather to survive? More to the point, what if that new position is so much beneath the wrongfully dismissed employee’s previous position that to deduct such earnings would work a disservice to the employee?

In the case of Brake v PJ-M2R Restaurant Inc., 2016 ONSC 1795, the Honourable Justice Kevin B. Phillips of the Ontario Superior Court of Justice held that a wrongfully dismissed employee’s ability to find employment did not take away from the loss she suffered from being dismissed without cause. Moreover, her new position, that of a cashier, was so substantially inferior to the managerial position she held with the defendant that, “the former does not diminish the loss of the latter.” As a result no deduction was applied on account of the mitigatory earnings.

I blogged about the trial decision in my post Trial Judge Finds Mitigatory Earnings too Insignificant to be Deducted from Wrongful Dismissal Award .

On May 23, 2017, the Court of Appeal for Ontario released its reasons for decision in respect of the appeal of that case: Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402.

What Happens in a Buy/Sell Deal if One of the Vendor’s Employees Refuses to Accept the Purchaser’s Offer of Employment?

(c) istock/BernardaSv

A typical term of any significant asset purchase agreement, which sees the employees of the vendor continue in employment with the purchaser, is that the purchaser will make offers of employment on substantially similar terms to the vendor’s employees. As is more fully explained in my post Continuity of Employment Following the Sale of a Business, pursuant to the provisions of Part IV of the Ontario Employment Standards Act, 2000:

If an employer sells a business or a part of a business and the purchaser employs an employee of the seller, the employment of the employee shall be deemed not to have been terminated or severed for the purposes of this Act and his or her employment with the seller shall be deemed to have been employment with the purchaser for the purpose of any subsequent calculation of the employee’s length or period of employment.

But what if one (or more) of the employees (unreasonably) refuses the purchaser’s offer? Is that employee still entitled to ‘severance’ pay? The answer will surprise most employers.

Trial Judge Finds Mitigatory Earnings too Insignificant to be Deducted from Wrongful Dismissal Award

The application of the duty to mitigate to the post-termination earnings of wrongfully dismissed employees is probably the most reviled subject that an Ontario employment lawyer will have to discuss with his employee clients. (By contrast, it is a favourite subject of employers.) In short, the doctrine essentially provides that an employer is entitled to the set-off of any post-termination dollars earned by the dismissed employee during the reasonable notice period. As the case of Davidson v. Tahtsa Timber Ltd., 2010 BCCA 528 demonstrates, sometimes by virtue of an employee’s success in finding new employment, an employee can be completely shut out from being awarded anything notwithstanding being wrongfully dismissed.

But what happens when an employee takes a new job not so much to “mitigate her damages”, but rather to survive? More to the point, what if that new position is so much beneath the wrongfully dismissed employee’s previous position that to deduct such earnings would work a disservice to the employee?

In the case of Brake v PJ-M2R Restaurant Inc., 2016 ONSC 1795, the Honourable Justice Kevin B. Phillips of the Ontario Superior Court of Justice sitting at Ottawa held that a wrongfully dismissed employee’s ability to find employment did not take away from the loss she suffered from being dismissed without cause. Moreover, her new position, that of a cashier, was so substantially inferior to the managerial position she held with the defendant that, “the former does not diminish the loss of the latter.” As a result no deduction was applied on account of the mitigatory earnings.

Fixed Term Employment Agreements Just got More Expensive and Dangerous for Employers in Ontario

Is an employee who is employed under a fixed term employment contract, which does not provide for early termination without cause, entitled to payment of the unexpired portion of the contract on early termination of the contract? Is that employee required to mitigate his damages following termination? Those were the question answered by the Court of Appeal for Ontario on April 8, 2016, in the case of Howard v. Benson Group Inc. (The Benson Group Inc.), 2016 ONCA 256.

Writing for a unanimous bench, the Honourable Justice Bradley Miller held that fixed term employment agreements that do not contain a legally enforceable termination provision cannot be terminated by employers simply upon the provision of reasonable notice; the employee is entitled to payment of the unexpired portion of the contract on early termination of the contract. Perhaps of greater consequence was the court’s decision that employees employed pursuant to fixed term employment contracts are not required to mitigate their damages following termination. This is going to cost employers some serious money.

"Cynical, Patronizing, Unfair, Impractical, and Expensive" - How Justice Perell described the Partial Summary Judgment Approach to Wrongful Dismissal Cases

Summary judgment, a method of resolving lawsuits without the need for a trial, has long been considered an appropriate means by which to resolve wrongful dismissal cases. The changes made in 2010 to the Rules of Civil Procedure, the rules governing lawsuits in Ontario, served only to increase the popularity of such a process.

But, as this blog has considered on more than one occasion, the speed and efficiency of summary judgment bring with them their own challenges in wrongful dismissal cases; most acutely what to do about the dismissed employee’s duty to mitigate?

In April of 2015, in the case of Markoulakis v SNC-Lavalin Inc., 2015 ONSC 1081 (CanLII) the Honourable Justice Andra Pollak held that the use of the “Trust Approach” previously approved by the Court of Appeal for Ontario in Cronk v. Canadian General Insurance Co. (1995), 25 OR (3d) 505 (CA) was no longer appropriate given the decision of the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7. That case was summarized by this blog in the post Rushing to Judgment: How to Reconcile the Duty to Mitigate with Summary Judgment in Wrongful Dismissal Cases.

More recently however, on June 29, 2015, the Honourable Justice Paul Perell, also of the Ontario Superior Court of Justice, in the case of Paquette v TeraGo Networks Inc., 2015 ONSC 4189 (CanLII) described the "Partial Summary Judgment Approach", where the employee is granted a partial summary judgment and the parties return to court during and or at the end of the notice period for further payments subject to the duty to mitigate, employed by Justice Pollak as “cynical, patronizing, unfair, impractical, and expensive.” Justice Perell specifically mentioned the Markoulakis case in making such comments.

Ouch.

Rushing to Judgment: How to Reconcile the Duty to Mitigate with Summary Judgment in Wrongful Dismissal Cases

How should the court account for a plaintiff’s duty to mitigate his damages following termination from employment, when summary judgment can be awarded before the expiry of the reasonable notice period?

More to the point, how can an employer ensure that the dismissed employee will take all reasonable steps to mitigate his damages if that dismissed employee is already in receipt of his pay in lieu of notice?

In the case of Markoulakis v SNC-Lavalin Inc., 2015 ONSC 1081 (released April 16, 2015), the Honourable Justice Andra Pollak held that the use of the “Trust Approach” previously approved by the Court of Appeal for Ontario in Cronk v. Canadian General Insurance Co. (1995), 25 OR (3d) 505 (CA) is no longer appropriate, given the decision of the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7.

Judge Finds it Reasonable for Employee to Refuse to Return to "A Good Place to Work"

Under what set of circumstances will an Ontario Superior Court judge say that it is “reasonable” for an employee to refuse to return to work for the employer that dismissed her as a means of mitigating her damages?

The law concerning the duty to mitigate is rather clear; employees who are dismissed by their employers have a duty to mitigate their damages and may be required to return to work for the employer that dismissed them in order to do so. However, as the Supreme Court of Canada observed in the case of Evans v. Teamsters Local Union No. 31, [2008] 1 SCR 661, 2008 SCC 20:

[30] The critical element is that an employee “not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation” and it is that factor which must be at the forefront of the inquiry into what is reasonable. Thus, although an objective standard must be used to evaluate whether a reasonable person in the employee’s position would have accepted the employer’s offer, it is extremely important that the non-tangible elements of the situation — including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment, the tangible elements — be included in the evaluation.

But what exactly is “an atmosphere of hostility, embarrassment or humiliation”? In the case of Turner v. Inndirect Enterprises Inc. (2009), 2009 CarswellOnt 9666, [2009] O.J. No. 6345, 87 C.C.E.L. (3d) 306 (ON SC) affd 2011 ONCA 97 the Honourable Justice David Salmers said that a culmination of seemingly common factors created such an atmosphere. It is an interesting read.

Dispute about Availability of Similar Employment Grounds to Dismiss Plaintiff’s Summary Judgment Motion

Will summary judgment be appropriate in a wrongful dismissal action if the issue of the plaintiff’s mitigation efforts are hotly contested? According to a 2013, pre-Hryniak decision, the answer can sometimes be “no.”

In a case where the primary concern was that of availability of similar employment, the Ontario Superior Court of Justice refused to grant summary judgment in an otherwise straightforward wrongful dismissal matter.

Still No Damages for Constructively Dismissed Employee

As an update to an earlier post, Employee Fired by Mistake had Duty to Return (published on this blog on September 3, 2012), on September 11, 2013, the Court of Appeal for Ontario upheld the decision of the Honourable Justice R.A. Lococo of the Superior Court of Justice, in which the court dismissed an employee’s claim for damages following an admitted constructive dismissal.

As a result of the loss of his appeal, the dismissed employee incurred a further $7,500.00 in costs awarded against him, in addition to the $50,000.00 awarded against him following the trial. Notwithstanding the fact that the employer had admitted that it had constructively dismissed the employee!

The case concerned the duty to mitigate and whether it was reasonable for the employee to refuse to return to the employer that had fired him. The reasons for the decision of the Court of Appeal for Ontario were reported at: Chevalier v. Active Tire & Auto Centre Inc., 2013 ONCA 548

BCCA: Refusing to Allow Employee to Work during "Working Notice" is Termination

Has an employee who is ‘walked to the door’ by his employer been fired or has he simply been subjected to a fundamental change in employment?

What if the employee was provided with “working notice” before being escorted to the door? Can someone be both: (a) escorted out of the building, told not to return, and announced as having “left the company”; and (b) an employee of that company at the same time? Or are those two positions mutually exclusive? Those were the question the Court of Appeal for British Columbia was asked to answer in the case of Allen v. Ainsworth Lumber Co. Ltd., 2013 BCCA 271 (CanLII).

ONSC Awards Four Months Notice to Employee With Less Than One Year of Service

What is the appropriate notice period for an employee dismissed after less than one year of employment? While the answer will always be “it depends,” in a decision released today by the Honourable Justice Catherine D. Aitken of the Ontario Superior Court of Justice sitting at Ottawa, Wellman v. The Herjavec Group Inc., 2014 ONSC 2039 (CanLII), the reasonable period for an employee who had worked for only 51 weeks was found to be four months.

The Duty to Mitigate: Employees Not Required to Accept a 'Bird in the Hand'

How selective can an employee be in pursuing new employment in order to “mitigate his damages?” In the case of Tsakiris v. Deloitte & Touche LLP, 2013 ONSC 4207, the Honourable Justice Michael A. Penny was asked to answer just that question.

ONCA: No Duty to Mitigate Unless Offer Made After Termination

Where an employer’s restructuring serves a legitimate business interest and is not merely a pretext for terminating an employee, should that employee be obliged, as part of his duty to mitigate, to return to work for the same employer? According to a recent decision from the Court of Appeal for Ontario, Farwell v. Citair, Inc. (General Coach Canada), 2014 ONCA 177, the answer is unclear. What is clear, however, is that in order for an employer to avail itself of the argument that an employee has failed to mitigate his damages by returning to work for the dismissing employer, (see: Evans v. Teamsters Local Union No. 31, 2008 SCC 20 (CanLII), [2008] 1 SCR 661,) the employer must offer the alternate position to the dismissed employee after termination, not before.

Hard Times: Economic Downturn, Judicial Discretion and the Duty to Mitigate

A few weeks ago this blog afforded an opportunity to an individual looking for work in employment law to write a guest blog post. Perhaps not surprisingly, following that post I was contacted by others in a similar situation looking to be afforded a similar opportunity.

This blog and, more to the point, Sean Bawden, are humbled by the success of this blog and by the request from others to write guest posts for it. Having given the issue some thought, the blog will continue to post articles by those looking for work in the employment law field in Ontario - provided that the posts meet certain quality standards. Whether those posts move to a separate page is an issue that will have to be considered; for now, they will appear on the main page.

What follows, then, is a post written by Paul Willetts on the subject of the duty to mitigate in today's economy. Commentary by this blog will follow and any comments by this blog are added in square brackets.

Employee Fired by Mistake had Duty to Return

“Baby come back, you can blame it all on me. I was wrong, and I just can't live without you.” Player in their 1977 hit “Baby come back.”

“In all seriousness however, what if an employer was fired by mistake? Could that employee still sue for wrongful dismissal?

Incredibly, that was the question that the Honourable Justice Richard Lococo was called upon to answer in the case of Chevalier v. Active Tire & Auto Centre Inc., 2012 ONSC 4309 (CanLII).