Employee’s Wrongful Dismissal Award Reduced for Failing to Accept a “Comparable” Position
In the recent Ontario Court of Appeal (“ONCA”) decision of Humphrey v. Mene Inc. [“Humphrey”], the ONCA found that a terminated employee, Ms. Jacquelyn Humphrey (the “Plaintiff”), failed in her duty to “mitigate damages” (i.e. find new employment following her termination) by rejecting an offer of employment for a comparable role.
The Plaintiff was employed by Mene Inc. (the “Company”) for approximately three years. At the time of her dismissal, the Plaintiff was 32 years old and had recently been promoted to the position of Chief Operating Officer (“COO”).
Several months after accepting her promotion, the Plaintiff asked for her salary to be reviewed. In response, the CEO questioned her dedication to the Company and removed her from the COO position while contemplating whether she would be terminated or demoted to a non-executive position. The Plaintiff refused to accept a demotion, and shortly thereafter, the Company terminated her employment.
The Plaintiff commenced a wrongful dismissal action against the Company in the Ontario Superior Court of Justice (“OSCJ”). She sought wrongful dismissal damages, as well as aggravated and punitive damages.
The Company defended the lawsuit, asserting that the Plaintiff’s employment had been terminated for cause, detailing her alleged performance issues and misconduct. Approximately 1 year later, the Company abandoned its ‘just cause’ allegations, claiming that the evidence of the Plaintiff’s alleged misconduct had been destroyed in accordance with the Company’s document retention policy. The Company changed its position that the Plaintiff was dismissed ‘without cause’.
Following the Plaintiff’s termination, she did not apply for any employment positions for 6 months. In the 7th month post-termination, the Plaintiff declined an offer for a role as Vice President of E-Commerce, because it was not “a broad-based senior leadership role” and did not provide greater compensation.
The OSCJ concluded that the Plaintiff was entitled to 12-months of reasonable notice.
In addition to considering her age, length of service, character of employment, and the availability of similar employment (collectively knows as the Bardal factors), the OSCJ judge also concluded that the Plaintiff would have a more difficult time finding a new position because “she would have to explain to prospective employers why she was terminated so soon after her recent appointment.”
The judge also considered the Plaintiff’s mitigation efforts, but only reduced her wrongful dismissal award by 1-month for her delay in searching for new employment. The judge did not find that the VP of E-Commerce role was comparable to the Plaintiff’s position at the Company, thus did not reduce her damages for rejecting that position.
The Company appealed the OSCJ Decision to the Ontario Court of Appeal (ONCA).
The ONCA sided with the lower court decision in awarding a 12-month notice period to the Plaintiff, stating that the difficulty the Plaintiff would face in explaining to prospective employers why she was terminated soon after her promotion justified the lengthy notice period.
However, the ONCA disagreed with the lower court’s ruling in regard to the plaintiff’s rejection of a comparable role, commenting that there is a difference between identical employment and comparable employment. As such, the ONCA reduced the Plaintiff’s wrongful dismissal damages to 6 months of compensation instead of 12 months, taking into account her rejection of the VP of E-Commerce position and her delay in applying for other comparable jobs.
The Bottom Line
The Humphrey decision is important for employers as it demonstrates the type of evidence that is required to establish that an employee has failed to mitigate their damages. The decision also demonstrates to terminated employees that a court will reduce wrongful dismissal damages if the employer can establish a failure to mitigate. Employers can do so in a variety of ways, including but not limited to, monitoring the post-termination job market and requesting records of the employee’s job search efforts during litigation. Notably, the job does not have to be identical in order to qualify as a comparable mitigation option.