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Recent Employment Law Case Notes (24 Month Cap & Deductions for Failure to Mitigate)

July 13, 2022

Business Employment Law and Human Rights

Recent Employment Law Case Notes (24 Month Cap & Deductions for Failure to Mitigate)

Two recent cases from the BC Supreme Court involving employees over 60 highlight two important employment law principles.

Okano v Cathay Pacific Airway Limited, 2022 BCSC 881

In Okano v Cathay Pacific Airway Limited, 2022 BCSC 881 ("Okano"), the plaintiff was 61 years old and worked for the defendant airline company for just under 35 years when she was terminated without cause during the pandemic. At the time of dismissal, the plaintiff was in a middle management position where she was responsible for some financial decisions and had the ability to hire and fire employees.    

The plaintiff did not have a written contract dealing with severance. Therefore, she sought a notice period of 26 months at common law. The court ruled that apart from exceptional cases, the upper limit for reasonable notice is 24 months:

[45] Our courts have been clear that, absent exceptional circumstances, the upper limit for reasonable notice is 24 months: Ansari at 42. The mere fact that the plaintiff was a long-term valued management-level employee does not constitute an exceptional circumstance that would lead to an increase in the upper limit of 24 months: Waterman v. IBM Canada Limited, 2010 BCSC 376 at paras. 20–24, aff'd on other grounds 2011 BCCA 337.

The court determined this case was appropriate to award the maximum 24 months given the employee’s long service, age, and management status.

Importantly, the court reduced the plaintiff’s damages by 3 months for failure to mitigate (with an additional contingency reduction of 15% to the 7 months remaining in the notice period). The plaintiff made no efforts to find work in the first two months, then made passive efforts until the next summer. Most significantly, she decided not to apply for work in the airline industry. In making this deduction, the court confirmed that reasonable mitigation requires that terminated employees actively pursue employment in their field of employment and/or industry.

Toy v 0954516 BC Ltd., 2022 BCSC 1161

In Toy v 0954516 BC Ltd., 2022 BCSC 1161, a 62-year-old fuel and scale attendant making about $40,000 pear year with 5 years of service brought a wrongful dismissal claim. In considering the Bardal factors, the court determined that 5.5 months of notice was appropriate.

However, this employee also failed to mitigate his damages by only applying for 3 jobs in the year following the dismissal. The judge found that had the employee made reasonable efforts, he would have found work sooner. As a result, the court reduced damages by 2 months. After factoring in the one month already paid at the time of dismissal, the employee only ended up with an award of 2.5 months pay or less than $10,000.

Takeaways

Employers can take some comfort in knowing that 24 months continues to be the common law maximum for reasonable notice, absent exceptional circumstances. However, 24 months is no small number especially for a senior manager! The best way for employers to avoid such exposure is to have well-drafted termination clauses that limit your liability to something less than the common law. If you would like your contract reviewed or if you would like to have contracts drafted, please contact your KSW lawyer today

Read more of these updates on our Employer Resources Portal and through monthly Newsletters. If you have any questions or need assistance revising your employment contracts or policies, please reach out to Chris Drinovz at cdrinovz@kswlawyers.ca, or submit a Contact form.

Author

CHRIS DRINOVZ

Partner

Chris D. Drinovz is an experienced employment and labour lawyer and the head of the Employment & Labour Group at KSW Lawyers. He was born and raised in Surrey and has practiced law exclusively in the Fraser Valley since 2010. Chris’ expertise covers all facets of the workplace including wrongful dismissal, severance opinions, human rights, discrimination/harassment, employment standards, employment contracts and workplace policies, dismissal planning, employee investigations, pension & benefits, disability and other insurance claims, employment insurance...

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