The case of Maximenko v. Zim, 2024 ONSC 5540, helpfully illustrates some of the nitty-gritty details of a wrongful dismissal case. In particular, it provides some helpful guidance on issues of mitigation and elements of compensation. Workers who have been terminated should be aware of what elements of their compensation they may be entitled to during a period of reasonable notice. Likewise, issues of mitigation can be tricky and can often make or break a wrongful dismissal case, hence it is helpful to have a sense of what the courts have found to be adequate mitigation efforts.
Mitigation
Workers who have been wrongfully dismissed have a duty to mitigate their damages. In other words, workers must take reasonable steps to minimize their losses resulting from their termination by looking for new employment. If a worker fails to take these reasonable steps, compensation awarded for reasonable notice may be reduced in proportion to the worker’s failure to mitigate. The judge outlined the test for proving that a worker has failed to mitigate their damages. Specifically, the onus is on the employer to prove that “(1) the employee failed to take reasonable steps to mitigate damages, and (2) if reasonable steps had been taken, the employee would have been expected to secure a comparable position reasonably adapted to their abilities”. The judge went on to add that workers’ mitigation efforts are not held up to a standard of perfection.
In the circumstances of this case, Ms. Maximenko applied for over 70 jobs between the day she was dismissed and the day her case was heard by the court (i.e., 18 months). Despite this, the employer argued that her efforts to find new employment were inadequate. In particular, the employer had sent Ms. Maximenko numerous job links after having dismissed her. However, Ms. Maximenko provided notes of these potential jobs noting that some were no longer available, some required qualifications she did not have. The court took note of Ms. Maximenko’s engagement with the employer-provided job links, holding that she had actually followed up on each posting, even if she ultimately determined the jobs were not the right fit for her.
Additionally, the court took relevant notice of Ms. Maximenko having family care obligations for her ill mother, who later passed on. The judge acknowledged that Ms. Maximenko’s job search efforts decreased during that timeframe to assist with her mother’s illness and passing. Ultimately, the court determined that, while Ms. Maximenko’s mitigation efforts may not have been perfect, they were reasonable. The court pointed towards the 70 applications she did pursue, as well as the difficulty for older employees, as she was in her 60’s by the time of the hearing, in finding new employment. Beyond that, the court took note that the employer did not demonstrate that Ms. Maximenko could have been successful if she took reasonable steps.
Elements of Compensation
Ultimately, the judge determined the reasonable notice period was 24 months. Then, the judge moved to focus on the constituent elements of Ms. Maximenko’s compensation. Helpfully, both the employer and Ms. Maximenko agreed on these elements, entailing annual salary, bonuses, car allowance, health insurance, and defined pension benefit plan. All of these elements formed part of Ms. Maximenko’s total compensation and should be covered under the reasonable notice period. While someone’s annual salary is generally not challenged for compensation, other elements of compensation like bonuses can occasionally result in further dispute during a wrongful dismissal case.
Despite the employer claiming that the annual bonuses were discretionary, the judge determined that Ms. Maximenko was entitled to her bonus throughout the notice period. However, due to evidence advanced at trial, there was a discount applied to the bonus. In particular, the employer paid out no bonuses in 2023, hence Ms. Maximenko could not receive a bonus that year. However, this was the only year with evidence showing a bonus was not paid out. In sum, the court applied a 3-year average to determine the amount of Ms. Maximenko’s bonus, with a particularized discount to reflect the missing 2023 bonus payout.
When ascertaining the value of the pension benefits, the court noted that, absent evidence on the present and commuted values of the pension, the value of the pension contribution is assumed to be a reasonable measure of the damages. To determine the reasonable measure of damages in this case, the court doubled the pension adjustment amount from Ms. Maximenko’s 2020-2022 T4 returns to reflect the 24-month notice period.