The Brake decision makes it abundantly clear that this is an onerous burden, and that an employer advancing mitigation arguments needs to go beyond simply establishing that income was
earned during the notice period.
Before the decision in Brake, Ontario law provided that all income
earned during the notice period, irrespective of its nature, was deductible from the termination pay owed.
Employees will argue that income
earned during the notice period should not be deducted because it was earned from substantially inferior work.
As well, the trial judge went on to award her more than $ 70,000 for the tips she would have
earned during the notice period, despite the fact she did not claim all of her gratuities on her income tax, nor did she or the defendant keep records of her tips.
The question is, in such a situation, is your employee liable to you not only for your base wages, but also for the tips you would have
earned during the notice period?
Gillese J.A. disagreed with the trial judge in this regard, finding, at paragraph 99, that «that approach does not accord with the principle that employment income
earned during the notice period is generally to be treated as mitigation of loss.»
In other words, in determining damages for wrongful dismissal, the court will typically include all of the compensation and benefits that the employee would have
earned during the notice period
Not exact matches
Damages for dismissal without reasonable
notice are designed to compensate employees for the losses incurred
during the
period of reasonable
notice — the amount of wages and benefits that they would have
earned had they been permitted to serve out the
notice period.»
In McLeod v. 1274458 Ontario Inc., the Superior Court of Justice determined that an employee who was incapable of working when he received
notice of termination was entitled to damages representing the salary he would have
earned had he worked
during the
notice period.
The Court further concluded that the employment income which Ms. Brake
earned during her statutory
notice entitlement
period was not deductible as mitigation income, reasoning that statutory entitlements (termination and severance pay) are not damages and that employees are entitled to receipt of these statutory entitlements whether or not they secure new employment
during the
period they are intended to cover.
Accordingly, an employee who is dismissed either while working or while on an approved medical leave of absence is entitled to damages consisting of the salary he or she would have
earned while working
during the working
notice period.
Any employment income that was
earned by the plaintiff from other sources
during the reasonable
notice period will then be deducted.
A court will reduce any monetary award made to the former employee by the amount of employment income the employee
earned from other sources
during the reasonable
notice period.
For example, if a court awards the dismissed employee ten months»
notice in the amount of $ 75,000 and the dismissed employee
earned $ 25,000 from another job
during that ten month
period, the court's final award to the dismissed employee will be $ 50,000.
The Supreme Court of Canada reiterated in Honda Canada Inc. v. Keays, 4 at para. 32 that damages are confined to the loss suffered as a result of the employer's failure to give proper
notice of dismissal, measured by the loss of wages and salary, and other benefits, that would have been
earned during the reasonable
notice period.
To prove a financial loss the dismissed employee will normally enter into evidence the details of his or her job search as well as inform the court whether any employment income has been
earned, if any, from other sources
during the
notice period claimed to prove that a financial loss has been suffered.
The award of damages will be reduced by the amount of employment income the dismissed employee
earned from other employment sources
during the
notice period, unless the terms of employee's employment contract did not require the employee to mitigate his or her damages.
The remedy is damages paid by the employer in the amount equal to the compensation that would have been
earned by the employee
during the reasonable
notice period that is owed.
That is, the appellant took issue with the trial judge's finding that under the Employment Agreement the appellant was not entitled to compensation for the loss of the LTIP benefits he would have
earned during a
period of reasonable
notice because the appellant was only entitled to severance pay, not the salary and other benefits which would have flowed to him
during a
period of reasonable
notice.
Usually, an employer may choose to terminate an employee by providing «reasonable
notice» of termination or payment in lieu equivalent to
earning that would have been paid
during the
notice period.