While employees terminated without cause are entitled to notice, or compensation in lieu of, employees also have a duty to mitigate their losses by attempting to find a new job. Where things tend to get tricky is when it has to be determined whether an employee did enough to mitigate their losses. In a recent case before the Supreme Court of British Columbia, the court was asked whether a terminated employee who found part-time work should have continued to look for full-time work in order to fulfil her duty to mitigate.

The employee was 48 years old at the time of the trial, holding an undergraduate degree in commerce and a master’s degree in higher education. She is currently working towards a PhD in education. She started working for a university (the “employer”) in 2007 as Director, International Programs and Exchanges. Her salary at the time was $99,799.96.

The employee requested and was approved for a one-year education leave to pursue her PhD. The leave commenced on September 1, 2014 and was set to conclude on September 1, 2015, though it was eventually extended to March 1, 2016.

Terminated after returning from leave

The employee returned from leave on March 1, 2016 and was terminated without cause. The employer said the termination was the result of a restructuring. The employer offered the employee a continuation of salary and benefits for a ten-month period. Throughout this period the employee was required to conduct reasonable job searches, advising the employer if she was offered a job. The offer also included the following provisions:

7. If you obtain new employment during the Salary Continuation Period with a “public sector employer” as defined in the Public Sector Employers Act, and if such employment provides you with gross monthly earnings which are less than the salary described in paragraph 2 above, the University shall pay you the shortfall during the remainder of the Salary Continuation Period
8. If you obtain new employment that is ongoing in nature during the Salary Continuance Period with an employer that is not a “public sector employer” as defined in the Public Sector Employers Act, all salary continuance payments shall end effective on the date you commence such employment, and the University shall provide you with a lump sum severance payment, less deductions required by law, equal to 50% of the remaining salary you would have received under paragraph 2 above if you had remained unemployed until the end of the Salary Continuance Period.

The employee did not accept the offer, but the employer paid her in accordance of it anyhow.

The employee finds a new job

Following her termination the employee learned of a job opportunity at another university, which would fit the definition of “public sector employer” as stated in the offer. She accepted a position with the new employer and started work on June 13, 2016. The position was part-time through the end of 2016, after which time it became a full-time position.

Upon learning of the employee’s new job, the employer terminated the salary continuation effective June 1. 2016. The result of this was that the employee only received three months of salary and benefits from the employer.

The employee took the employer to court, seeking 10-12 months of notice at her old salary, less what was paid to her over the three months leading up to her new job. The employer argued they should not have been obligated to pay the employee for any notice extending past the start of the employee’s new job, and in any event, notice should only have been 8-10 months.

The court first asked what the length of notice required to be given to the employee should have been. After taking in to account the employee’s age, experience, the responsibilities of the former job, and the employer’s offer of a ten-month notice period, the court found 10 months to be a reasonable period of notice.

The second issue was whether the employee complied with her duty to mitigate damages after finding alternate work on a part-time basis. The employee’s new job had been available on a full-time basis when she started, but she chose to work on a part-time basis so she could focus on her PhD. She argued it was in her best interests to complete her studies, and that it was also in the employer’s best interests since they were paying for it. The employee argued that her long-term interests were best served by starting her new job on a part-time basis.

The court did not agree with the employee’s argument, writing “I can agree with the (employee) that a dismissed employee is entitled to consider her long-term interests but I do not agree this means her former employer is required to pay for the interests of the (employee) at issue here. Nor do I agree that the (employee) is entitled to be placed in the best possible position in relation to her long-term career objective following her dismissal.”

The court ruled that the employer’s obligation to pay the employee in lieu of notice ended when she accepted her new job.

The employment law team at HMC Lawyers represent both employers and employees in legal matters stemming from the workplace. We help draft policies and contracts designed to reduce the chance of litigation in the future while protecting the interests of our clients. We have decades of collective experience in all matters of employment law. Please contact us online or by phone at 403-269-7220 to see how we can help you with your employment law issue today.