In the recent Ontario decision Kraft v. Firepower Financial Corp., a dismissed employee was awarded a higher notice period due to his clear efforts to mitigate in light of the demonstrated difficulty of job searching in the midst of the COVID-19 pandemic.
The Plaintiff, Mr. Kraft, was terminated from his job with the defendant without cause. He had worked with the defendant for 5.5 years, most recently as a specialized commissioned salesperson in investment banking with special focus on mergers and acquisitions. Mr. Kraft was mid-career and was well-qualified. His job required him to have specialized knowledge of the banking industry. He made a base salary of $70,000, and he also made bonus and commissions.
Of note, Mr. Kraft was involved in a major M&A deal with Arzon Limited (“Arzon”), a deal that closed six months after his termination of employment without cause.
Court Influenced by Employee Efforts, In Spite of Difficulties Arising From the COVID-19 Pandemic
In the circumstances, there was no doubt that Mr. Kraft made significant efforts to mitigate his losses as required by law. During the 13 months following his termination, he applied for over 70 different jobs. This certainly is not an insignificant effort.
Mr. Kraft was dismissed right at the outset of the COVID-19 pandemic. His job search coincided with the general closing of the economy due to COVID-19. Of central concern to the trial judge in this case was the job market at the time of Mr. Kraft’s dismissal and job search, as well as the impact of COVID-19 on that job market. Notably, and especially during the first half of the COVID-19 shutdown, there was much uncertainty in the economy and many employers had no interest in hiring workers in light of that uncertainty.
The employer attempted to argue that because Mr. Kraft was actually dismissed before the official COVID-19 shutdown, as implemented by the government, that this is not much of a consideration. However, regardless of when the government declares an emergency, the economy was already shutting down and remained closed during employee’s “inevitably prolonged search”. According to the trial judge:
“A global pandemic does not just emerge on the day of the government’s emergency decree.”
After reviewing comparable case law, the trial judge found that an employee like Mr. Kraft would, on average, receive around 9 months’ compensation. However, after considering the evidence related to the impact of COVID-19 on his job search, the trial judge felt he deserved slightly more: 10 months (i.e. one month more than if his termination were to occur in “non-pandemic” times).
Employee Awarded Commissions for Deal Closing After Termination
An interesting issue, in this case, is whether or not Mr. Kraft should be compensated for the commissions he would have earned from the Arzon deal had he remained with the employer. According to the Supreme Court of Canada, any commission that would have come due during the notice period is payable to the terminated employee. Furthermore, those commissions are considered wages under the Employment Standards Act and are required to be paid during the notice period.
The Arzon deal closed during the notice period (i.e., 6 months into the 10 month notice period). Therefore, applying the above principles, Mr. Kraft was owed the commission on that deal (which amounted to $77,559).
Employer / Employee Takeaway
For employees, this case reiterates the absolute necessity of keeping track of your job search efforts in order to prove you’ve met your duty to mitigate.
Employers, on the other hand, should consider keeping their own records regarding what jobs are available within a dismissed employee’s skills and qualifications and holding that employee accountable for not applying to such jobs. This would appear to be a failure to mitigate.