REPRESENTING EMPLOYERS AND EMPLOYEES IN OTTAWA, CANADA
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Mitigation Damages: Not every dollar earned reduces damages

 

Esther Brake may be the hardest working person in Ottawa.  She was sixty-two years old and Managed a Kanata McDonald’s while simultaneously holding down a part-time position as cashier at Sobey’s.  Ms. Brake was constructively dismissed when her Employer demanded she accept a demotion to First Assistant or leave.  After refusing the demoted position because it would be embarrassing and humiliating her  employment was terminated.

Ms. Brake successfully sued for wrongful dismissal damages and was awarded twenty months compensation including her car allowance. 

Following the termination of her employment she diligently pursued other income.  Ms. Brake attempted a babysitting service and then a cleaning service listing both businesses on Kijiji and putting up posters.  She applied to several positions available at Shopper’s Drug Mart, Home Depot, Tim Horton’s, IKEA, Mark’s Work Warehouse, Costco, Loblaws, Dollarama, Bed Bath and Beyond, Swiss Chalet, LCBO, Target and even a mystery shopper role at McDonald’s.

Ultimately Ms. Brake accepted employment with Home Depot and Tim Horton’s.

McDonald’s argued the income Ms. Brake received following her dismissal and during the twenty month notice period reduced its obligation to pay wrongful dismissal damages.

Employees who are dismissed without reasonable notice are entitled to damages for breach of contract based on the employment income they would have earned during the reasonable notice period.  Employees must mitigate their damages seeking other employment.  To the extent they earn any money from these efforts their former Employer is credited and consequently damages paid to the Employee for wrongful dismissal are reduced.

While Employers are generally entitled to a deduction for income earned by the dismissed Employee from other sources the court refused to reduce Ms. Brake’s damages noting that her employment with McDonald’s permitted her to moonlight.  She worked at Sobey’s prior to her termination because she didn’t earn enough money from McDonald’s to support her son.  This work was not a substitute for the income she received from McDonald’s.   The modest sum of $600.00 received from Home Depot and Tim Horton’s was similarly not deducted. 

Where a wrongfully dismissed employee is forced to accept a much inferior position because there is no comparable position available and they cannot afford to earn nothing, the amount earned is not necessarily deducted from damages the Employer must pay.  It is always open to a trial judge to determine whether or not to deduct earnings.  Where a new job is vastly inferior to the old one such that the employee would not be in breach of the duty to mitigate if it was turned down, the earnings should not be deducted.