In Humphrey v. Mene Inc., 2022 ONCA 531, the Ontario Court of Appeal ("ONCA") found that the employee in question, Humphrey, was entitled to a reduction from 12 months' notice to 6 months' notice as a result of her failure to properly mitigate her damages. The ONCA justified this reduction in damages due to Humphrey's rejection of a comparable offer received 7 months post-termination of employment.
At the time of Humphrey's dismissal, she was 32 years old, with 3 years of service, working in the position of Chief Operating Officer, and earning an annual salary of $90,000 (with participation in the employer's bonus/stock option plan). Seven months after the termination, Humphrey received an offer of employment for the position of VP of E-Commerce, with compensation of $125,000 base salary, at least $25,000 in options, $75,000 bonus based on achieving jointly determined metrics, and benefits. Humphrey ultimately did not accept this position, she had requested a c-suite title and greater compensation. Humphrey remained unemployed at the date of the motion for summary judgment.
At the lower court, the employer raised a number of issues with respect to mitigation of damages, including: excessive delay to commence her job search, applying to a narrow range of available positions, and not accepting a comparable employment offer. Most notable and accepted by the courts, was Humphrey's refusal of the comparable offer received seven months post-termination, as noted above. The motion judge found that the reasonable notice period for Humphrey was 12 months; however, the motion judge found that the employer failed to establish that the position was comparable. The motion judge stated that the employer had not provided the Court with persuasive evidence or analysis on whether this position was comparable in terms of role, stock options, bonuses, etc. The motion judge ultimately only reduced Humphrey's notice period by one month.
The ONCA found that the motion judge erred in concluding that the position was not comparable for the purpose of mitigation. The ONCA noted that the motion judge had set the bar too high on the issue of mitigation in addressing the evidence before her. Comparable employment does not mean identical employment. It means "a comparable position reasonably adapted to [the plaintiff's] abilities." It was sufficient for the employer to rely on evidence that Humphrey had been offered a senior management position with a comparable or greater compensation. The ONCA also stated that, "it is difficult to conceive of what further evidence an employer could adduce to establish that an employee has unreasonably rejected an offer of comparable employment."
As such, the employer met its obligation of demonstrating that the damages for the balance of the notice period could have reasonably been avoided. Humphrey's rejection of this comparable position limited her recovery for compensation in lieu of notice to the point at which the offer was made, seven months post-termination.
Ultimately, this case demonstrates the importance the courts place on mitigation in the employment wrongful dismissal context. While employers bear the burden of establishing that terminated employees have failed to mitigate their damages by seeking and accepting reasonably comparable employment, this case offers further clarity on what will be considered as a comparable position for the purposes of mitigation.
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