In Ontario, when an employee is terminated without cause, the employee is required to mitigate their damages by making reasonable efforts to secure comparable employment. This means that if a terminated employee fails to apply for any new employment positions, they may not be fulfilling their obligation to mitigate their damages.* Similarly, if an employer offers a terminated employee a comparable position and the employee declines the employment offer, they may be found to have failed to mitigate their damages. The Ontario Superior Court recently dealt with an employee’s opportunity to mitigate their damages with an offer from a successor employer.
In Giduturi v LG Electronics Canada Inc., LG announced that it was outsourcing its warehouse to a contractor and all warehouse employees would be offered equivalent employment by the contractor. When Mr. Giduturi received the offer from the contractor, he worried that some of the terms of his employment were not comparable. Namely, the new employment position was “at-will,” which is unenforceable in Ontario, and the benefit package was not as comprehensive. Mr. Giduturi also worried about the security of his employment if he accepted the new position with the contractor. Mr. Giduturi eventually declined the offer, and the contractor filled the position. As a result, LG terminated Mr. Giduturi’s employment without cause and provided him with $11,420.03, or approximately 3.1 months of his base salary, as a severance payment for his nearly 13.5 years of employment.
Mr. Giduturi sued LG for wrongful dismissal as he was unable to find comparable employment. LG argued that Mr. Giduturi failed to mitigate his damages by rejecting the contractor’s employment offer. The Court evaluated whether the contractor’s offer was in fact “comparable,” and ultimately decided that “the duty to mitigate was not engaged by this offer because it was made and withdrawn before the plaintiff’s actual termination” [emphasis added]. The Court also evaluated Mr. Giduturi’s mitigation efforts outside of the contractor’s offer and stated,
Having rejected the defendant’s reliance on Pantos’s offer, I have no difficulty in concluding that the plaintiff made reasonable efforts to mitigate his damages. He provided a job log showing that he applied for a great many comparable positions and had four job interviews where he advanced to the second round of a job competition.
This case offers important lessons for employers regarding mitigation. While employment offers can reduce an employee’s reasonable notice period by showing that the employee failed to mitigate their damages, this case demonstrates that the timing of the offer is important. If an employment offer is made prior to termination and is no longer available after termination, an employer may not be able to argue that the employee failed to mitigate their damages. If you are terminating an employee’s employment and have questions regarding mitigation, please contact the lawyers at Heeney Vokey LLP.
AODA Compliance Reporting Deadline
The deadline under the Accessibility for Ontarians with Disabilities Act (“AODA”) to file a compliance report is quickly approaching. Pursuant to the AODA, all businesses operating within Ontario with 20 or more employees must file an Accessibility Compliance Reporting Form (“Compliance Report”) every three years. The deadline to submit the Compliance Report is December 31, 2023. The Compliance Report can be found here.
For any questions about employer obligations, please contact Heeney Vokey LLP.
* This may be subject to exceptions.