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Not All Mitigation Earnings Deductible from Reasonable Notice Award

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The Ontario Divisional Court recently upheld the decision of a trial judge not to deduct all of an employee’s mitigation earnings from the reasonable notice she was awarded. The employee had been unable to re-employ at the same rate of pay and was working more hours to earn less money.

At the time of her wrongful dismissal, the employee had a regular work week of 30 hours paid at a rate of $30 per hour, earning a weekly income of $900. During the reasonable notice period, she obtained new employment at a rate of $20 per hour, working five days per week.

On these facts, the trial judge determined that it was not necessary to deduct all of the income the employee earned during the notice period because the employment that she found required her to work more and differing hours at substantially less remuneration per hour. As a result, the trial judge determined that the employee was only required to account for mitigation income of up to 30 hours per week at $20 per hour, or $600 per week, during the relevant notice period and that the extra hours that she was required to work weekly at the much lower rate would not be deducted from her damages arising from her wrongful dismissal.

The Ontario Divisional Court acknowledged that the assessment of damages where an employee obtains new employment within the notice period at a substantially lower rate of pay remains unsettled in law. However, not every benefit derived from complying with the duty to mitigate must in every circumstance be deducted from the resulting damages. In the absence of proof by the employer that the employee obtained other employment of “approximately similar kind”, the employee should in fairness be entitled to recover the former salary owing from the number of hours that she had previously worked for the employer. As a result, the decision of the trial judge could stand

In assessing liability in wrongful dismissal cases, employers should be aware that, out of fairness to the employee, courts may take the position that not all mitigation earnings received by an employee who reemployed in a clearly inferior position will be deducted from the damages awarded for wrongful dismissal.

McGroarty v. Linita Design