When mitigation isn’t mitigation

Ontario Court of Appeal stirs controversy by not excluding employee’s income during notice period from constructive dismissal damages
By Rhonda Cohen and Tim Allen
|Canadian Employment Law Today|Last Updated: 09/27/2017

In a recent decision, the Court of Appeal for Ontario erred when it excluded from “mitigation income” all earnings by a dismissed employee during what the court referred to as the “statutory entitlement period” — a notional period created by the court, equivalent to the number of weeks used to calculate the employee’s entitlement to pay in lieu of notice and severance pay under the Employment Standards Act (ESA).

Essentially, the court erred by confusing “statutory payments” — pay in lieu of notice and severance pay — with other income earned during the notice period. Statutory payments are mandated, minimum sums payable in any event. They are not “replacement” income and cannot be reduced by other mitigation income (Boland v. APV Canada Inc.). By contrast, all other income earned during the notice period is replacement income, except for supplementary income. The court’s error appears to be based on a misreading or misunderstanding of Boland.

Unfortunately, until this error is corrected, it is likely to be followed and perpetuated by other courts.