Generally speaking, a wrongfully dismissed employee has a duty to mitigate their damages by seeking alternative employment. If they are successful in finding new employment, the income they receive from that new employment will typically result in a deduction to the amount of wrongful dismissal damages they might be awarded in connection to their original termination. While this is generally true, a recent decision of the Federal Court seems to suggest that it is not necessarily always true.
The Dismissed Employee
This case concerned Mr. Dengedza, who had been unjustly dismissed from his employment with the Canadian Imperial Bank of Commerce (CIBC). At the time of his termination, Mr. Dengedza was 66 years old and held the position of Senior Investigator, Anti-Money Laundering Investigations Group. He had been with the bank for 9.5 years. He was earning an annual base salary of $60,400.
After his termination, Mr. Dengedza filed a complaint of unjust dismissal under the Canada Labour Code. He and the employer agreed that Mr. Dengedza would not be seeking reinstatement, and the employer would correspondingly not be asserting just cause for his termination. As a result, the only issue for the adjudicator to decide was the quantum of reasonable notice that should be awarded to Mr. Dengedza. Ultimately, the adjudicator decided that 14 months’ notice was appropriate.
The adjudicator was then tasked with deciding whether to deduct from this amount the income Mr. Dengedza was earning from his side job as an UBER driver.
The UBER Job
Prior to his dismissal, he was also working part-time as an UBER driver during non-business hours. CIBC gave him permission to do so. After his dismissal, Mr. Dengedza was understandably in need of cash and decided to increase his UBER hours. He began driving for UBER 60 hours each work. In doing so, Mr. Dengedza earned approximately $600 per week. According to Mr. Dengedza, the money he was making from UBER should not be deducted from his damages award because the work was “of a different character” than the work he had been performing at CIBC, and further because “his earnings were minimal and supplementary in nature.”
The adjudicator rejected his arguments. Before his dismissal, his UBER earnings were indeed minimal. However, after his dismissal and after he significantly increased his hours spent driving, his net earnings increased substantially. In the adjudicator’s opinion, his earnings did not represent a “minimal, trivial or inconsequential sum.” The adjudicator therefore considered the UBER earnings to be “amounts received in mitigations of loss” and had them deducted from the compensation payable by CIBC.
The UBER Job, According to the Federal Court
At the Federal Court, Mr. Dengedza argued the adjudicator erred in deducting his post-dismissal UBER earnings from the damages award because that income could not be properly characterized as mitigation earnings. On the other hand, CIBC argued that the UBER earnings were neither minimal nor supplemental, and were instead earned in substitution of his former income at CIBC.
The Federal Court agreed with Mr. Dengedza. They relied on the Ontario Court of Appeal’s reasoning in Brake v. PJ-M2R Restaurant Inc., where it was explained that:
“… if an employee has committed herself to full-time employment with one employer, but her employment contract permits for simultaneous employment with another employer, and the first employer terminates her without notice, any income from the second employer that she could have earned while continuing with the first is not deductible from her damages…”
Furthermore, Justice Feldman, in her minority concurring decision in the same Ontario Court of Appeal decision, argued that income earned from a substantially inferior position should not be deducted from damages:
“… if she can only find a position that is not comparable in either salary or responsibility, she is entitled to turn it down, and if she does, the amount she could have earned is not deducted from her damages. … It follows, in my view, that where a wrongfully dismissed employee is effectively forced to accept a much inferior position because no comparable position is available, the amount she earns in that position is not mitigation of damages and need not be deducted from the amount the employer must pay.”
The adjudicator in Mr. Dengedza’s case considered his post-dismissal UBER earnings sufficiently high to constitute replacement or substitute income. However, according to the Federal Court, this was a “somewhat arbitrary finding.” The adjudicator did not consider whether Mr. Dengedza, in earning his post-dismissal UBER income, had to work harder or longer than he would have needed to at CIBC in order to make the same “sufficiently high” figure. It is difficult, the Federal Court said, to see how working more hours in lesser paying positions can serve as a straight dollar for dollar substitute for the amount that would have been earned, in fewer hours, with the original employer.
As a result, the Federal Court held that the adjudicator’s failure to assess whether Mr. Dengedza’s post-employment UBER income was “fairly substituted and deducted as mitigation earnings, on a dollar for dollar basis with his CIBC earnings” rendered that part of the decision unreasonable. Therefore, Mr. Dengedza’s UBER income should not be deducted from his award of damages.