Duty to Mitigate: Dismissed Employees Cannot Place Limits on Search for New Employment

A recent BC Supreme Court decision in Moore v. Instow Enterprises Ltd. provides helpful guidance regarding the extent to which a dismissed employee must go to mitigate their losses by searching for comparable employment.

Facts

The plaintiff in this case was a 53 year old employee who had worked at Kal Tire as a commercial sales associate for 26.5 years. The plaintiff did not have a written employment agreement.

In May 2020, the plaintiff was dismissed without cause and received payment of 8 weeks in lieu of notice. Kal Tire had experienced a significant downturn in their business due to the COVID-19 pandemic. After his dismissal, the plaintiff started his own woodworking business, which experienced limited success, and confined his job search efforts to positions that were essentially the same as the one that he had held with Kal Tire (i.e. commercial sales jobs in the tire sector).

The plaintiff brought an action against his former employer for wrongful dismissal. At trial, it was agreed that the plaintiff was entitled to pay in lieu of reasonable notice at common law. As such the two main issues considered by the trial judge were:

(1) what amount of reasonable notice was the plaintiff entitled to; and

(2) whether the plaintiff made reasonable efforts to mitigate his losses.

Analysis 

The trial judge found that the plaintiff’s position as a senior sales representative, his more than 26 years of service, and his age (53) supported a notice period of 20 months. However, this award was reduced by 3 months to account for the plaintiff’s failure to mitigate his losses by making reasonable efforts to search for similar employment.

The judge held that “a reasonable search requires more than creating a CV and doing computer searches and that a reasonable job search may include activities such as reaching out to contacts within the industry, writing cover letters setting out why you qualify for a position, following up with telephone calls, or email correspondence.”  The judge found that the plaintiff limiting his search to commercial sales jobs in the tire sector was unreasonable in the circumstances and that more flexibility was required in his search.

The judge also held the plaintiff starting his own company was not an adequate response to his obligation to mitigate damages, as the evidence suggested that the plaintiff could not have reasonably expected his new business to provide an alternative source of employment or income.  

Implications for Employers

For employers facing a wrongful dismissal claim from a dismissed employee, this case is a useful illustration of the efforts that a dismissed employee must make to mitigate their losses by searching for comparable employment.  The court’s decision also highlights the exposure for employers when they do not have a written employment contract to limit the amount of severance owed on termination without cause.

This update was authored by Neal Parker. Looking for more information regarding similar situations? Contact Neal at [email protected] or anyone else listed on the authors page.