What Is A “Wrongful Dismissal”?
Wrongful Dismissal – Mitigation Of Damages
A wrongful dismissal refers to when an employer ends their relationship with an employee and fails to provide that employee reasonable notice or pay in lieu of notice (“severance”). This can occur in the following instances:
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- The employer terminates your employment without cause and without notice, sufficient notice, payment in lieu of notice, or sufficient pay in lieu of notice.
- The employer terminates your employment alleging just cause despite there not actually being reasonable grounds to terminate for just cause. A termination for just cause requires a high threshold and is highly fact specific.
- In the alternative, the employer significantly changes the terms of your employment. Common examples include demotion and or reduction in pay.
- Another option is, the employer breaches an implied term of the employment agreement. For instance, the employee is now having to work in unsafe work conditions, toxic work environment, and or discriminatory conduct.
What Do I Do If I Was Subject To A Wrongful Dismissal?
The employer may present to you a severance package and a “release”. Alternatively, an employer may change the terms of your employment, and present a new employment contract. In both of these instances, if you sign the legal document from your employer, you may end up contractually removing any rights to pursue a wrongful dismissal claim. You may also remove rights to pursue any additional damages you could have. It is important you seek legal advice when your employer is asking you to sign a document.
I Was Wrongfully Dismissed, When Should I Look For A New Job?
An employee who has been wrongfully dismissed has a duty to mitigate damages by finding comparable employment. However, you do not have to mitigate this by taking any employment. There is an expectation to make reasonable efforts to find comparable employment usually in terms of title and pay. The definition of “comparable” will depend on the facts of a particular case. When it comes to mitigation of damages, you do not have to act in the employer’s best interests. Instead, you must act reasonably in your own interests by seeking alternate employment.
It is important to note the courts recognize that a wrongful dismissal can be a shock. In some circumstances, afford the wrongfully dismissed employee with “breathing space”. “Breathing space” is between 1-3 months following the dismissal. During this time, the employee is not expected to search for new employment immediately. This is because they require time to recover from the shock or trauma of the dismissal. Further, they may have to reassess how they will earn an income moving forwards. Usually, the longer a person’s term of employment, the more likely they will get “breathing space”. Alternatively, if the term of employment is relatively short, then there is an expectation to make reasonable efforts to find employment shortly after the dismissal. If the term of employment was for a couple of years, it is unlikely that you will get “breathing space” unless there are extenuating circumstances.
Remember you should always keep track of any mitigation efforts you have made in finding comparable employment which can include applications, updating your resume, or even calling your contacts in your search for new employment.
What Do Courts Consider Reasonable Efforts To Mitigate?
The courts have identified the following principles with respect to assessing reasonable mitigation efforts:
- The burden of proof rests with the defendant (employer) to show that the plaintiff (employee) failed to mitigate damages. The court will not allow the defendant, in discharging that onus, to be overly critical of the plaintiff. Having committed a wrong, the defendant should not point out the victim’s shortcomings to avoid resulting losses. The plaintiff will get the benefit of doubt.
- The duty to mitigate does not invariably require immediate action on upon the breach. All that the plaintiff must do is act reasonably in the circumstances. As such, courts may allow considerable delay in some cases.
- In determining the reasonableness of mitigation efforts, the court will not impose an exacting standard but rather a practical perspective in line with business realities. In other words, an employer cannot require the employee to act perfectly.
- The plaintiff need not incur great expense of inconvenience in an attempt to stem the flow of losses resulting from the defendant’s breach. Nor need the plaintiff incur unreasonable risk or embark on a speculative venture to mitigate losses.
- The court considers the individual facts of each case in determining whether mitigation efforts are reasonable.
If the court were to find that you did not make reasonable efforts, they may reduce the damages you are seeking for the wrongful dismissal.
What If I Find A New Job But My Income Is Less?
If you were wrongfully dismissed but found a new job that pays less, you may still be entitled to damages.
For example, your income with company “A” is $100,000.00. Your employer wrongfully dismisses you but you find a job immediately after the dismissal with company “B”. But company “B” is only offering $50,000.00. Company “A” would have to pay the difference in income over the notice period.
Using the example above, if you require a notice period of 12 months, your damages would be $50,000.00. Which represents the difference in income. Alternatively, if you made reasonable efforts to find new employment after company “A” dismissed you, and you did not find new employment, your damages would be $100,000.00 as there had been no mitigation despite your reasonable efforts.
Can I Make A Claim For Wrongful Dismissal Immediately? Even Though I Haven’t Made Any Attempts To Find New Employment Yet?
The short answer is yes. Typically, when you are dealing with a wrongful dismissal claim, your lawyer will send a “demand letter” to the employer right away. In practice, after the lawyer sends the demand letter, the employer will retain legal counsel. The lawyers then enter into negotiations with respect to your settlement.
Mitigation becomes more of a factor based on the length of the notice period being sought. For instance, if the notice period is 4 months, mitigation is less of a factor due to the short period of time. However, if you are seeking a 20-month notice period, the employer will take the position that you will likely find new employment in that period thereby mitigating damages.
Because it is unknown if and when you will find comparable employment following a wrongful dismissal, it is usually a variable that your lawyer will address into the settlement amount if theya re trying to settle the matter prior to the notice period expiring.
If the notice period does expire and the matter has not yet been settled, the employer will generally request that you provide mitigation efforts so they can determine their risk and whether they should settle at that time.
Remember mitigation is only one factor when the lawyers are assessing risk the value of your claim. There may be other defences that exist against your wrongful dismissal claim. Your lawyer will consider them and discuss then with you accordingly.
Getting Help From Alberta Employment Lawyers
If you believe you were wrongfully dismissed, you can contact our Calgary and Edmonton office. To make things easier, we offer in person, telephone and video consultations in Alberta. For the fastest service, please email our office with a brief outline of your situation. This allows us to provide you with feedback, information and / or the ability to set up a meeting with the appropriate lawyer.
Please email us at [email protected]. Alternatively, please feel free to call us at 403-263-8220 or at 1-877-225-8817 from anywhere in Alberta.