Canada: The Obligation Of A Terminated Employee To Mitigate Damages: The Court Of Appeal Of Québec States Its Views Once Again

For the second time in a few months, the Court of Appeal of Québec has released a decision on the parameters of the obligation of an employee to mitigate his damages when terminated without serious grounds under section 2091 of the Civil Code of Québec. This decision was rendered on September 3^rd in Levy c. Standard Desk Inc.¹

Facts

After facing financial difficulties, the employer, Standard Desk, decided to cease operating in Laval and to terminate all of its employees. Among these employees was Mr. Levy, a 75-year-old quality control agent who had given the employer a total of 38 years of continuous service: a two-and-a-half-month notice of termination was given to him at that point. Furthermore, the employer offered all of its employees the possibility to go work for a company in Granby which was part of the same group. Mr. Levy refused this offer, as he considered that due to his age, he would not be able to travel such a distance to get to work.

Deeming the notice of termination given by the employer to be insufficient, the employee then brought an action before the Superior Court of Québec seeking compensation in lieu of notice of termination in an amount equivalent to twenty four (24) months, as well as $20,000 in moral damages.

Decision of the lower court

The Superior Court of Québec, per the Honourable Suzanne Mireault, stated that the reasonable notice of termination the employer should have given Mr. Levy was 16 and a half months, minus the two-and-a-half-month notice the employer had given the employee at the time of termination. However, the Honorable Justice Mireault found that Mr. Levy was in fact not entitled to such notice as he had not fulfilled his legal obligation to minimize his damages by failing to prove, on one hand, his inability to accept the job offer made by the employer at the time of termination, or failing that, his inability to secure employment elsewhere, due to his age. The judge also rejected the applicant's moral damages claim, as there was no evidence proving that the termination had been handled in a way deemed to be humiliating, degrading, hurtful or mean-spirited².

Decision of the Court of Appeal of Québec

In deciding the appeal filed by the applicant, the Court of Appeal first of all found that under the circumstances, the 16-and-a-half-month notice of termination awarded by Justice Mireault was excessive. While taking into account the importance of Mr. Levy's age and years of continuous service, the Court of Appeal noted that the nature and importance of the employment are also key elements to consider when calculating a reasonable notice of termination. In this case, the employee held a subordinate position for which he received an annual salary of approximately $38,000. On these grounds, the Court of Appeal stated that the employee should have been given a reasonable notice of 10 and a half months, minus the 2-and-a-half-month notice provided by the employer at the time of termination.

The Court of Appeal then dealt with the obligation to minimize damages which is incumbent upon an employee terminated without serious grounds under the Civil Code of Québec, which is defined as an employee's obligation to make a reasonable effort to find and accept other employment suiting his qualifications. In this case, the Court indicated first of all, that it was not unreasonable for the employee to reject the offer made by the employer, as the considerable travel distance involved with that employment would have added a great burden on Mr. Levy's tasks.

Secondly, with regards to the employee's failure to take measures to find new employment, the Court of Appeal found that considering the circumstances of the case, this element was without consequence since it deemed that there was no link between Mr. Levy's failure to make the required effort and the damage he suffered. In the Court of Appeal's view, even if Mr. Levy had actively sought employment during the notice period awarded to him, i.e. 7 and a half months, his efforts would have ended in failure. Consequently, the Court of Appeal found that there was no causal link between the compensation which the employer was required to pay and the employee's breach of the obligation to mitigate his damages: 

"The failure to mitigate is a fault that carries the consequence of diminishing or even extinguishing the right to compensation in lieu of notice. With that said, to bring about such an outcome, the fault must be causal. There is no doubt however, that the appellant would have failed had he made efforts to find equivalent employment. If a fault was indeed committed, it did not change anything"³. [TRANSLATION]

The Court of Appeal therefore refused to reduce the amount of the compensation in lieu of notice of termination owed to the employee.

In light of this decision, one more element has been added to the analysis of the obligation incumbent upon the employee under section 1479 of the Civil Code of Québec to mitigate the damages suffered when he has been terminated without serious grounds and when the employer fails to provide him with sufficient notice of termination. It appears that the employer will no longer be able to systematically rely on an employee's breach of the obligation to mitigate his damages in order to decrease the compensation in lieu of notice of termination owed to the employee. Instead, there will be the additional requirement to determine if the employee, were it not for his breach of obligation, would actually have found equivalent gainful employment during the notice period set by the court.

Conclusion

This decision comes in addition to the one rendered a little earlier this year by the Court of Appeal of Québec in Gareau (Le Groupe Gareau) c. Brouillette⁴, in which the Court had criticized the lower court judge for having imposed too heavy a burden upon the terminated employee by requiring that he begin seeking new employment immediately after termination, that he send over twenty résumés and make follow-up phone calls, that he make use of his industry contacts and that he look for employment in areas located far from his residence.

Overturning the Superior Court's decision to reduce from 12 to 6 months the compensation in lieu of notice of termination owed to the employee, the Court of Appeal had highlighted the fact that the victims obligation to minimize its damages is an obligation of means and that the related test is based on objectivity: it consists in determining what conduct a reasonable person would have had under the same circumstances:

"I find that the obligation to minimize these damages is an obligation of means and not an obligation to take all imaginable means to reach the desired outcome. Having assessed the facts through the objective lens of the conduct of a reasonable person, I've reached the conclusion that Brouillette acted reasonably in attempting to minimize the harm he sustained.  An employee terminated after 20 years of service is entitled to an adequate period of time to deal with the choc of being terminated and to think about what career direction to take. Furthermore, in this case, we must take into account the fact that the search for employment was complicated by the Christmas and New Year's Holiday season."⁵ [TRANSLATION]

In that case, the Court of Appeal decided to reduce by 1 month (instead of 6) the compensation in lieu of notice of termination that the employer was ordered to pay out to its former employee.

Footnotes

1. 2013 QCCA 1473

2. 2012 QCCS 3471

3. Ibid at para. 48.

4. 2013 QCCA 969

5. Ibid at para 53.

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