A recent decision from the Supreme Court of British Columbia, Okano v. Cathay Pacific Airways Limited, 2022 BCSC 881, reaffirms that the upper limit for common law reasonable notice is 24 months, absent exceptional circumstances.
Background
The plaintiff was employed by the defendant, an airline company, as a manager of their Vancouver Global Centre (the "Vancouver Centre"). At the time of the plaintiff's dismissal, she was 61 years of age, had been employed by the defendant for nearly 35 years, and was the most senior person in her business unit.
The COVID-19 pandemic had a devastating effect on the airline industry. The defendant implemented several measures in an attempt to continue operations and reduce the need for mass employee terminations. Ultimately, the defendant closed the Vancouver Centre.
The defendant provided the plaintiff with two months' working notice of the termination of her employment and offered her a severance package in exchange for a release, which she declined. Therefore, the defendant paid the plaintiff the statutory minimum three-month severance as required by the Canada Labour Code, R.S.C. 1985, c. L-2. The plaintiff then commenced an action for wrongful dismissal.
Analysis and Decision
24 months' is the upper reasonable notice limit, save exceptional circumstances.
The defendant admitted that the plaintiff was entitled to common law reasonable notice damages for wrongful dismissal, but disagreed on the quantum of damages being claimed. The plaintiff argued she was entitled to payment in lieu of notice for a period of 24 to 26 months. The defendant argued she was entitled to closer to 18 to 20 months' notice.
The court concluded that considering the plaintiff's age, length of service, and management role, she was entitled to 24 months' notice. However, this was the limit – referencing its 1986 decision in Ansari v. British Columbia Hydro and Power Authority, the court stated:
Our courts have been clear that, absent exceptional circumstances, the upper limit for reasonable notice is 24 months... 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.
Failure to mitigate reduces the damage award.
The court reduced the 24 months' notice award by three months, due to the Plaintiff's failure to take reasonable steps to mitigate her loss.
If a defendant can establish that a plaintiff failed to take reasonable steps to mitigate their loss, the court may reduce the reasonable notice damages awarded for wrongful dismissal. The court explained this duty to act reasonably as taking "such steps a reasonable person in the dismissed employee's position would take in her own interests – to maintain her income and her position in her industry, trade, or profession".
In this case, although the court recognized that an individual whose employment has been recently terminated does not necessarily fail to mitigate their loss if they do not immediately take steps to seek alternative employment, the plaintiff did not apply for jobs for several months following her dismissal. As well, although she eventually applied for 50 jobs and attended 8 job interviews by the time of the decision, she had not applied for positions in the airline industry, despite several of those positions being similar to her job with the defendant. The court found the plaintiff could have found alternative employment in her industry had she taken reasonable steps, and this was a failure to mitigate.
The court further reduced the plaintiff's damage award by a contingency discount of 15%. Although the plaintiff had been unemployed for 17 months at the time of the decision, the court determined that there was a real and substantial possibility the plaintiff would secure employment prior to the end of the awarded notice period. This conclusion was in part based on the fact that the defendant had provided evidence of over 750 available jobs in the Vancouver area with similar job descriptions and titles to the plaintiff's previous job with the defendant.
Key Takeaways
Absent exceptional circumstances, the length of reasonable notice remains capped at 24 months. The fact that a dismissed employee was a very long-service employee and in a managerial position are not an exceptional circumstance warranting a reasonable notice period higher than 24 months.
The onus is on the employer to demonstrate that the employee has failed to mitigate their loss. A long delay by the plaintiff in commencing their search for employment, a failure by the plaintiff to apply for positions in their former industry, and/or evidence of several available and equivalent job postings in the plaintiff's geographical area may all be considered evidence of the employee's failure to mitigate, potentially reducing the amount of damages awarded.
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