An Ontario court ordered a former employer to pay a dismissed employee’s mitigation and moving expenses of just over $45,000 after she was forced to relocate to take a new job.
The Facts
The employee began her career with the employer in 1999. She holds the professional designations of Certified General Accountant, Certified Public Accountant and Certified Payroll Manager. She also has an MBA.By the time she left her employment in 2015, she had received a series of promotions and held positions of increasing seniority and responsibility. However, after a major corporate merger and re-organization, she found herself with what she perceived to be a vastly diminished job and an uncertain future. She concluded she had been constructively dismissed and resigned her employment with the defendant.
The employee was able to find a new job. However, her income was reduced and she had to relocate to take the new job, incurring expenses to do so. She sued her former employer to recover her losses arising from her reduced income and her relocation costs.
The Issues
At issue were whether the employee was constructively dismissed and what damages she may be entitled to under the Employment Standards Act (“ESA”). Additionally, the court had to assess what damages were recoverable by the employee on account of mitigation expenses.
The Decision
On the first issue, after reviewing the evidence, the court found that the employer’s actions amounted to constructive dismissal. Additionally, the court found that, as a result, the employee was entitled to termination pay and severance payment under the ESA. She was also entitled to a common law damage award based on a calculation that subtracted her replacement income from her projected income with the former employer.
The court then turned to the issue of mitigation expenses. It noted thatin the case of an employee who has been wrongfully dismissed, the terminated employee is required to mitigate their damages by seeking and accepting reasonable alternative or replacement employment. It found that in this case, the employee mitigated her damages by accepting a job in southwestern Ontario at a reduced income.
The court noted that, in addition to her lost income claim, the employee was seeking reimbursement for various expenses that she says she incurred in order to transition to her new employment, or “costs of mitigation”. The court cited experts on this subject, who explain:
“A dismissed employee may be entitled to claim from the employer reasonable out-of-pocket expenses incurred while fulfilling the duty to mitigate and seeking out and accepting alternate employment. These costs are considered to be expenses incurred in the mitigation of damages and are the responsibility of the employer.”
Part of these recoverable expenses may include: real estate commission, moving expenses and legal fees incurred by an employee as a result of wrongful dismissal.
The court stated:
“By accepting the new job as she did, the [employee] substantially mitigated her damages. She reduced the [employer]’s exposure to a significant damage claim founded on lost income. To do so, however, she was forced to relocate. In my view, it would be inequitable to allow the [employer] to benefit from the [employee]’s mitigation efforts while at the same time denying her reimbursement for all costs she incurred to achieve that positive outcome. I therefore conclude that the [employer] should reimburse her for all reasonable expenses incurred in mitigating.”
Turning to the specific mitigation expenses incurred, the court summarized them as follows:
(1) expenses on the sale of the house in Mississauga;
(2) expenses on purchasing the house in southwestern Ontario; and
(3) expenses incurred during the transitional period while the employee was employed and staying in southwestern Ontario, before she sold the house in Mississauga and purchased the new house in southwestern Ontario and moving costs.
The court awarded the employee total mitigation expenses arising from the sale of the Mississauga house of just over $34,000. It awarded her mitigation expenses in the total amount of $3,500 for land transfer taxes, legal fees and related expenses incurred on the acquisition of the new house and $7,500 in moving and transitional expenses.
All totalled, the court ordered the employer to pay the employee mitigation expenses of just over $45,000.
Get Advice
If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Campbell Bader LLP. We regularly advise both employers and employees on a wide range of issues that arise at work. Contact us online or by phone at 905 828 2247 to schedule a consultation.