Employer’s Duty to Give Reasonable Notice or Payment in Lieu

It is an established principle in employment law that an employer is allowed to terminate or fire an employee without cause, which means without a reason, but that they must give their employee “reasonable notice” or “pay in lieu of reasonable notice.” This means that they must give their employee notice in advance that the employee will be dismissed, or pay them to compensate for the lack of notice. The Courts have indicated that beyond statutory minimum notice periods, what is “reasonable” will depend on many factors, including the type of position the employee held, the duration of the employee’s post, the employee’s age, and whether similar employment is available for the employee to find.

Employee’s Duty to Mitigate

When an employee is constructively or wrongfully dismissed from a job, they have a responsibility to try to find comparable alternative employment. This is called “mitigating their damages”, which means minimizing their damages.

If an employer accuses a former employee of failing to mitigate, it is the employer’s (or their workplace lawsuit lawyers’) responsibility to prove it. In a 2010 case Link v Venture Steel Inc, the Ontario Court of Appeal (“ONCA”) held that employers must prove that (1) their former employee did not take reasonable steps to mitigate their damages and that (2) if such steps were taken, the former employee would have likely obtained comparable employment that was reasonably adapted to their abilities.[1]

Employees Need Not Seek Out Lesser Job

In a recent ONCA case, Lake v La Presse, an employer alleged that a former employee failed to mitigate her damages after being dismissed without a valid reason. In this case, an online newspaper company dismissed its employee without cause, and only gave her about one month’s notice of the termination, even though she worked there for five and a half years. The rough rule is that the Court usually awards one month of pay per year that the employee worked with the company. The employee tried to find new employment, but two years after her termination, remained unemployed. The employer’s employment litigation lawyer argued that the employee had failed to mitigate her losses by failing to find another job. The lower court judge agreed with the employer, and held that the employee should have sought out lower-paying jobs to mitigate her damages. The lower court judge accordingly reduced the notice (or payment in lieu) that the employee was entitled to.

The ONCA reversed the judge’s decision, stating that the employee did not need to seek out or accept lower-paying jobs than the one she was terminated from. The employee had worked for the employer as a General Manager, and was the most senior employee in her division. The ONCA disagreed with the lower court judge’s statement that the employee should have applied for Sales Representative positions, stating that terminated employees had a duty to find “comparable employment,” which typically meant employment that was similar in status, hours, and remuneration to their previous position. The case stands for the proposition that employees did not need to seek out lower-paying jobs, even if they experienced difficulty in finding a comparable job to their last one.

In Lake v La Presse, the ONCA further noted that the employee had not “aimed too high” by applying to jobs that had higher titles compared to the role she previously occupied. The ONCA found that the employee had in fact applied for positions that were comparable in compensation and job duties to her old job, even if the titles ostensibly appeared to be for more senior or high-status roles. The ONCA warned against placing too much emphasis on job titles, and stated that courts needed to examine actual job descriptions and consider whether they overlap with an employee’s prior work experience.

If you are fired from your employment without cause and without reasonable notice or payment in lieu of notice, you have a responsibility to seek a comparable replacement. However, this does not mean that you have to accept a lower paying job as an attempt to mitigate your losses. If you need advice on mitigating your damages after being dismissed, or on other employment dispute issues, contact Walker Law.

[1] Link v. Venture Steel Inc., 2010 ONCA 144, at para. 73.

Tag: Employment litigation law

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