Employment & Labour, Mediation

Appeal court unnecessarily complicates law on mitigation: Fisher

By AdvocateDaily.com Staff

Ripple effects are being felt from an Ontario Court of Appeal (OCA) decision that needlessly complicated the calculation of mitigation income, says Toronto employment mediator and arbitrator Barry B. Fisher.

The decision changed the law on when mitigation income will result in a deduction from a damages award and Fisher, principal of Barry Fisher Arbitration & Mediation, says arbitrators, mediators and judges in lower courts across the province will be dealing with the fallout for years.

“This was an area of employment law that was extremely well-settled,” he tells AdvocateDaily.com. “Then the Court of Appeal comes along with a decision that creates more uncertainty, litigation and fighting — all over an issue that should have been made easier, not harder.”

The case involved a restaurant manager let go from her job without notice or the payment of statutory entitlements due to her under the provincial Employment Standards Act (ESA). A three-judge panel of the appeal court upheld the trial judge’s decision to award her $100,000 in damages after finding she was entitled to 20 months' notice.

The panel also ruled that income she earned during her “statutory entitlement period” for severance and termination pay under the ESA was not subject to mitigation. The panel also backed the trial judge’s ruling that a further $600 in income earned as a hardware store clerk should not be deducted from her damages, with one member writing that a wrongfully dismissed employee should not have to count mitigation income earned when they are “effectively forced to accept a much inferior position.”

Before this judgment, Fisher says the law on mitigation was “very easy,” since there were only very limited circumstances requiring a departure from the dollar-for-dollar deduction of income earned during the notice period.

However, by turning the statutory entitlement period into a “mitigation-free zone,” he says the court created inequities — depending on when in their notice periods they earn mitigation income — between wrongfully dismissed employees.

“Judges live in a little bubble, and when they see a case in front of them presenting what appears to be inequity, they are not always cognizant of how it will play out in the rest of society,” Fisher says. “What is necessary to achieve justice in the case before them can have a ripple effect that is not a net positive in terms of workplace law.”

Fisher says a more recent Superior Court case illustrates some unintended consequences of the OCA decision.

The judge awarded the 65-year-old plaintiff $49,000 in damages after finding he was entitled to nine months' reasonable notice following his termination from a job as manager of a printing plant.

However, the judge quoted the appeal court decision in refusing to deduct the more than $17,000 the man earned in lesser jobs during the notice period, noting that he was “obliged to take positions that were inferior in responsibility and salary after his termination.”

“Here the mitigation income was about 37 per cent of his old income, but it wasn’t deducted,” Fisher says. “And right now, we have very little guidance about how high that proportion has to go before it will count.”

He says more cases will have to make their way through the courts before the profession gets an idea of what amount of pay or status of a job is acceptable for income to count towards mitigation.

Even if a hard number is set, say at 75 per cent of the old income, Fisher says it will encourage some plaintiffs to game the system by accepting jobs for salaries just below the threshold while continuing to claim unmitigated damages.

In the meantime, he says the uncertainty is being felt in his mediations, where disputes over the status and salary of job offers are becoming an additional hurdle to settlement.

“Before the appeal court case, it was a no-brainer. You could simply do the math,” Fisher says. “In my opinion, the established law worked fine.”

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