Lower Court Erred While Canada’s Ontario Court Of Appeal (OCA) Sets Aside The Order In Wrongful Dismissal Action For Failure To Mitigate!
Karma Management has now become Karma Management Global Consulting Solutions Pvt. Ltd. which was incorporated in the year 2004, having now completed almost 18 years of its existence.
As late as April 2021, Karma Global took a very bold step of venturing into foreign shores in terms of shoving up its business in countries like US, UK, UAE, Canada, and South East Asia.
It has already made its mark in terms of providing excellent services in the areas of payroll, outsourcing , recruitment and talent acquisition, HR Services,
Facility Management Services and Regulatory Compliances in these foreign countries.
Just last month, Pratik Vaidya, CVO & MD of Karma Management Global Consulting Solutions Pvt Ltd went on an Europe tour , participating along with Advantage Austria and brainstorming on the ecosystem of Startups in Salzburg, Austria
ADVANTAGE AUSTRIA, has around 100 offices in over 70 countries, and provides a broad range of intelligence and business development services for both Austrian companies and their international business partners of which Karma Management Global Consulting Solutions Private Limited is one of them.
Karma Global thus entails the compliances of global clients in these countries as well , and in keeping with the global scenario, it does keep a very hard track on the status of global compliances all around the world and especially so, it keeps an upto date watch on what is happening as far as people, wages, work , benefits , issues and layoffs, court submissions and judgements are concerned across the globe.
Two things that come out clearly from the stables of Karma Global is firstly , excellent client service and secondly, it provides terrific workplace environment. This is so because it has a panel of experts or consultants as is designated, who offer professional advice which comes from a person who is adept , qualified and experienced to attend to the needs of the clients. They are meticulous in guiding the clients on the plan of action so that the clients can achieve the company’s objectives or make up several strategies and this also supplements or adds up during the time of crisis.
Understanding the ever changing HR compliance obligations of global business operations is the key to staying compliant. HR regulatory policies are vast, dynamic, and differ from country to country. Incumbent policies frequently become obsolete and get replaced by newer regulations – and unknowingly, you could be violating requirements and at a high risk, even before your organization realises and incorporates these newer changes.
Revisions to laws and changes to International Labour Standards can have a dramatic effect on your HR compliances if you are not prepared. Karma Management is unique in this respect given the expertise that it holds, which indeed helps its global clients to navigate the complexities of international relocation requirements and reporting.
Karma keep on reviewing the current programme delivery, and highlights potential exposure and any kind of risk, provides solutionized recommendations and implementable solutions.
Its employees are endowed with expertise in taxation, social security, immigration (including visas and work permits), corporate tax, insurance, contractual obligations, legal jurisdictions , regulatory norms and practices.
Karma takes a step by step look at the (1) background of the case (2) lower court’s judgement (3) higher court’s decision (4) and high alert for employers in this specific dismissal action.
In Lake v. La Presse, 2022 ONCA 742, the only issue on appeal was whether the lower court erred in reducing the employee’s wrongful dismissal damages for failure to mitigate.
The Ontario Court of Appeal (OCA) set aside the lower court’s judgment in Lake v. La Presse (2018) Inc., 2021 ONSC, discussed here, as it found an error in the reduction of the reasonable notice period of eight months to six months for failure to mitigate.
Background Pertaining to the Mitigation Issue
The employee, general manager, age 52, was employed for 5.6 years when her employment was terminated without cause. The parties agreed the employee was entitled to reasonable notice.
Lower Court Decision re Mitigation of Damages
The lower court decided the reasonable notice period should be eight months; however, it reduced it to six months after deciding that, for the following reasons, the employee failed to take reasonable steps to mitigate her damages:
She waited too long before beginning her job search. It is reasonable to expect her to have begun in earnest as of May 1, 2019, but she delayed for an additional month before seriously looking for work.
She aimed too high. There is nothing wrong with her having applied for vice president roles, but she should have been applying for less-senior roles as well, as general manager, and eventually as a sales representative if she continued to remain unemployed.
She waited too long before applying for any jobs, and she applied to very few jobs.
The court inferred that, had the employee expanded the parameters of her job search, searched earlier, and applied for more positions, her chances of obtaining a position would have improved significantly. Although the court acknowledged that there was no direct evidence in front of it of other positions the employee could have applied for, it assumed that they existed, noting that if vice president roles were available, more junior roles were also available. The lower court’s view was that the employee chose unreasonably to limit her job search and it concluded that this had a corresponding impact on her ability to find work.
OCA Decision
The OCA began its analysis with a summary of the following legal principles respecting mitigation of damages for wrongful dismissal:
The duty to mitigate is based on the premise that the employer is not responsible for losses that an employee could reasonably have avoided.
The burden is on employer to prove: (1) that the employee failed to take reasonable steps to mitigate their damages; and (2) that if they had done so, they would have been expected to secure a comparable position reasonably adapted to their abilities.
The determination of whether an employee took reasonable steps in mitigation, including whether the failure to mitigate caused any part of the loss, is largely a question of fact.
In the absence of an error in principle or a palpable and overriding error, a decision respecting mitigation is entitled to deference.
The OCA determined that the lower court erred when it concluded that the employee failed to take reasonable steps to mitigate. Although it acknowledged that the lower court did not err in finding that the employee unreasonably delayed the start of her job search, the OCA found that the lower court did err when it held that in order to mitigate, a dismissed employee must begin searching for a lesser-paying job after spending a reasonable period of time attempting to find similar employment. The OCA held that an employee is obliged only to seek “comparable employment,” i.e., comparable in status, hours and remuneration at dismissal.
The OCA also found that the lower court made a palpable and overriding error when it concluded that the employee aimed too high when she applied for vice-president positions. In arriving at this conclusion, the lower court rejected the employee’s claim that although she applied for positions that had more senior titles, the responsibilities were similar to her previous employment. The OCA’s view was that the lower court placed too much emphasis on the titles, erroneously assuming that the positions were not comparable; this influenced the court to determine that the employee did not reasonably mitigate, but the record did not support this.
The OCA then found that the lower court erred in its assessment of whether the employee would have found comparable employment if she had taken reasonable steps. It noted that at the second stage of the test for mitigation, the lower court inferred that had the employee expanded the parameters of her job search, searched earlier, and applied for more positions, she would have had a significantly greater chance of obtaining a position. While the OCA agreed that in an appropriate case an employer could meet the second branch of the mitigation test by drawing a reasonable inference from proven facts, it found no evidence in this case to support the inference.
It was the view of the OCA that the lower court did not ask or answer the proper question at the second stage of the mitigation test, i.e., whether the employer had proven that, if reasonable steps in mitigation had been taken by the employee, she would have found a comparable position during the reasonable notice period.
Bottom Line for Employers
Employers hoping to establish that a wrongfully dismissed employee’s reasonable notice period should be reduced because they failed to take reasonable steps to mitigate their damages are encouraged to pay close attention to the OCA’s decision in Lake v. La Presse, which clarifies that:
The employee must not unreasonably delay the start of their job search
The employee is obliged to seek only “comparable employment” (i.e., status, hours and remuneration). An employee is not obliged to begin searching for a lesser-paying job after spending a reasonable period attempting to find similar employment.
If the employee applies for a position with a title that is more senior than their previous title, it should not be assumed that they are not taking reasonable steps to mitigate. The responsibilities of a position applied for should be the focus rather than its title.
It is only from proven facts that an employer and a court may draw a reasonable inference that had the employee expanded the parameters of their job search, searched earlier, and applied for more positions, they would have had a significantly greater chance of obtaining a comparable position.
Conclusion
Although the OCA did not explicitly indicate what an “unreasonable delay” might be, it is notable that in this case the employee was advised on March 25, 2019, that her employment would end effective May 30, and she stopped working for the employer on April 30, 2019.
The lower court found it was reasonable to expect her to have begun to seriously look for work as of May 1, 2019, but she delayed for an additional month. The OCA agreed with the lower court that it was unreasonable for her to have done so.
Karma while dealing with all such issues and cases, always takes the approach to act trust-worthily and to be compliant with the laws of the land.
Karma Management always advises its clients to be on the good side of the law and to abide by the same. In this respect, it offers a plethora of excellent services in terms of documentation compliance and validity of licenses for running the business and also supports establishments and union afflicted workers to take a just stand on issues , in the company’s interest and not on trivial grounds just for the sake of it , to show the level of aggression.
EMPLOYMENT LAW COMPLIANCE: When it comes to HR compliance, what you don’t know can hurt your Organization. With continuously changing employment laws and regulations , Karma Management Global Tech Firm understands the concerns that employers have with falling out of regulatory compliances, including the fear of costly fines or lawsuits resulting from unclear employee policies and lack of know how of employment laws.
The respect for all fundamental principles and rights at work (FPRW), including freedom of association and the right to collective bargaining, is an essential foundation of the ILO and key to successful policy and decision making.
As the world of work is changing at an ever increasing pace, strong, influential and inclusive social dialogue is, and will be, a key vehicle to shape the world of work that we want.
Proprietory blog of Karma Global
This blog has been collated and compiled by the internal staff of Karma Global with the knowledge and expertise that they possess, for its monthly newsletter Issue 06 of December 2022 and in case of specific or general information or compliance updates for that matter, kindly reach out to the
Marketing Team – Kush@karmamgmt.com / yashika@karmamgmt.com