Wrongful dismissal: How long do you have to look for another job?

Uncertain judgeIf you successfully sue for wrongful dismissal, one of the things a court will consider when assessing how much compensation you should receive is whether you have mitigated your damages by making adequate efforts to look for a new job.

The problem, particularly for older workers, can be that after a few months of looking for work, it may become apparent that there isn’t much out there for senior employees in your field. So you may want to train for a new position or start a new business. But in these circumstances, you might validly question if a Court could rule that you have not adequately mitigated your damages.

A recent Ontario Superior Court decision in Leeming v. IBM Canada Ltd., 2015 ONSC 1447 shed some much-needed light on this problem when Susan Jane Leeming was awarded 10 months of salary in lieu of reasonable notice, although she only searched for full-time comparable employment for four months after she was fired.

Subsequently she decided to start her own business specializing in digital marketing solutions for small and medium-sized companies. On the date the motion for judgment was heard, she had not yet earned a profit from the business.

Background information

Leeming was hired by DWL Incorporated in April 2005. Soon after the company was acquired by IBM and in August of the same year she received a written offer of employment from IBM. She was employed by IBM for approximately eight years until age 60. The company had a Separation Policy governing terminations that was posted on the company intranet but it was not referenced in her employment agreement and she never saw a copy.

Her position was Senior Managing Consultant when she was fired and in 2012 she earned $116,844.46 (excluding bonuses and benefits.) She was responsible, among other things, for project management including project scheduling, tracking budgets and liaising with clients to ensure deliverables were met.

She received a termination letter offering her one month of working notice plus a separation payment of $42,213.82 less required deductions, conditional on her signing a release. The offer was not conditional on her seeking or accounting for new employment.

She refused the offer and on August 27, 2013 IBM paid her $26,881.15 which included four weeks of pay in lieu of notice and 8.36 weeks of severance pay. In addition she was paid for accrued and unused vacation days

Leeming’s lawyer argued at the hearing that she was entitled to 16 months’ pay in lieu of reasonable notice in view of her age, her tenure and the unavailability of comparable employment. IBM told the Court that reasonable notice was six to nine months but disputed her claim for any damages on the basis that she failed to mitigate.

Mr. Justice Paul Perell ruled that the reasonable notice period was 10 months. He was also satisfied that Leeming did not fail to mitigate her damages. He accepted that she made reasonable and diligent efforts to find new employment and then made a reasonable decision to become, in effect, her own employer by training herself for her new career as a franchisee.

He noted:

“It is easy enough for IBM to say that Leeming should have stayed in the labour market longer but, in my opinion, she tested the market long enough to make a reasonable decision to retrain for a new career. So far, her franchise has not been a success, but had it quickly proven to be a success, I have no doubt that it would have counted as reducing damage claim.”

Taking into consideration the $35,580.55 she already received from IBM, she was entitled to $64,650 for salary, loss of contributions to the pension plan, and the monthly cost of replacing her other IBM benefits.

What this means for you

This decision suggests that if you are terminated and seeking damages for wrongful dismissal, you have some flexibility in the way that you reduce your damages. Just because you have abandoned traditional means for obtaining a position does not mean that you have necessarily failed to mitigate.

 

 

 

 

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