In Mac’s Convenience Stores Inc. v. Basyal, 2025 BCCA 284 the BC Court of Appeal confirmed that employees on fixed-term contracts are required to mitigate if the contract is terminated early, unless there is an express term to the contrary.
This differentiates British Columbia from other jurisdictions, notably Ontario, where the Court of Appeal has concluded there is no duty to mitigate in the context of a fixed-term agreement[1].
Background
The confirmation was made in the context of a class action lawsuit related to the hiring of migrant workers under Canada’s Temporary Foreign Worker Program.
The plaintiffs were all workers who had been recruited by an immigration consultant to work at Mac’s convenience stores in western Canada. Among other issues, a subclass of the plaintiffs alleged that when they arrived in Canada, the jobs they had been promised did not exist or, if they did, they were not compliant with the terms of their contract.
Ahead of the full trial, the parties requested the court determine several issues by way of summary trial, including whether the workers had a duty to mitigate by seeking alternative employment when the job did not materialize, even though they were on fixed-term contracts – an open question in British Columbia.
At summary trial, the judge accepted that, absent a term to the contrary, an employee under a fixed term contract in BC has a duty to mitigate, correctly recognizing that employment contracts are subject to the ordinary rules of contract interpretation.
While the contract in question did not contain an express term ousting the duty to mitigate, she went on to find that the contract in question contained an “implied term.” In implying that term, the judge specifically considered the vulnerability of the workers and the limitations relating to their work permits, and concluded that expecting them to mitigate by either (a) working illegally or (b) waiting 6-8 months to obtain a new work permit resulted in a “practical absurdity.”
Court of Appeal clarified limits on implied terms
The Court of Appeal overturned the judge’s finding that there was an implied term, warning that “terms cannot be implied into a contract merely because it seems fair or convenient. The terms must be necessary to give efficacy to the contract, or to avoid incoherence.” In this case, the judge had failed to consider whether implying a term there was no duty to mitigate was inconsistent with the express terms of the contract, which the Court of Appeal determined it was, as the contract expressly contemplated that temporary foreign workers may need to change jobs.
Significance of decision
In reaching its conclusion, the Court of Appeal acknowledged that the barriers to mitigation were likely “significant” for these employees, but noted it was important to “distinguish between the duty to mitigate and the capacity for mitigation.” The Court of Appeal agreed that it would likely be difficult for the employer to meet is burden to prove that the employee had not taken reasonable steps to avoid loss in the circumstances; however, that did not mean there was no duty to mitigate at law.
The decision continues the welcome trend in BC of the courts applying a practical, common sense approach to contractual interpretation in the context of employment agreements, using accepted contractual interpretation principles. This gives more confidence that the terms of a well-drafted employment agreement will continue to be enforced between the parties in BC.
For more information on this topic, please contact Victoria Merritt.
[1] Colleen Hoey, “Exploring fixed term contracts: legal considerations for employers,” Dentons Canadian Employment & Labour Blog, July 2023, Exploring fixed term contracts: Legal considerations for employers – Dentons Canadian Employment & Labour Law
