Dismissed employee was entitled to full contractual severance
notwithstanding her failure to mitigate
Many employers attempt to define an employee's right to
compensation upon dismissal by having clear, enforceable
termination provisions in their employment contracts. But what
happens if the dismissed employee is offered re-employment shortly
after termination and fails to accept it? Is she still entitled to
the full contractual severance amount?
The Court of Appeal, in its recent decision Maxwell v. British Columbia,
confirmed the answer is yes: a dismissed employee was found to be
entitled to the full amount of contractual severance and did not
have to mitigate her damages by accepting an offer of new
In this case, Ms. Maxwell was employed by the British Columbia
College of Teachers as their director of certification. She was
employed under an employment contract which stated that she was
entitled to an "all-inclusive payment in lieu of notice"
equivalent to a month of salary and benefits per year of service
(plus additional amounts if she was employed longer than nine years
or was over 50 years old) if her employment was terminated without
Effective January 9, 2012, the College was dissolved by the
province and replaced by the Teacher Regulation Branch (the
"Branch"). On December 1, 2011, Ms. Maxwell was offered
employment with the new Branch, but she did not accept it. Instead,
she contended that she was entitled to the full severance amount
and related benefits under her employment contract.
The College and Province declined to pay Ms. Maxwell's
severance, arguing, among other things, that she had failed to
mitigate any damages caused by the termination of her employment
when she declined the Branch's offer of new employment.
The trial judge and the Court of Appeal both disagreed. The
Court found that, when a contract provides for a specific severance
payment upon termination, a dismissed employee is entitled to that
amount and is not required to mitigate his or her damages by
seeking or accepting new employment. The Court of Appeal put it
this way (at para. 27):
Where a contract
provides for the effect of termination, generally the provisions of
the contract prevail. Recourse to the common law is not required.
In some circumstances, the contract may require mitigation, but
where it does not the innocent party is entitled to what was
agreed. The guilty party is not entitled to graft onto the bargain
struck by the parties additional terms that dilute or modify the
entitlement of the innocent party.
The case is a good reminder about the importance of carefully
drafted termination provisions. If they want to preserve the
employee's duty to mitigate, employers should ensure that any
contractual termination provisions which require a severance
payment (and which exceeds minimum statutory standards) include an
express obligation on the employee to seek and obtain reasonable
new employment as a condition of the payment.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
A former teacher at Bodwell High School has learned a valuable lesson from the B.C. Human Rights Tribunal— it is not discriminatory for an employer to offer child-related benefits to only employees with children.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
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