Failure to properly mitigate damages results in a reduced award for damages
Lorna Gillespie had worked for Snowflake Trading Corp. Ltd., a relatively small retailer of women’s fashions, for 12 years. She began her employment as a salesperson at one of its stores and was eventually promoted to the position of manager at its “flagship” store in the Hotel Vancouver.
As a store manager Ms. Gillespie was responsible for all aspects of the day-to-day operations of the store including opening and closing the store, banking, security, receiving and displaying merchandise. She also hired and trained new personnel. Initially she was responsible for staff scheduling but this task was eventually transferred to head office. She did not have authority to fire people. She prepared monthly sales reports and evaluated the product lines carried by the store. Finally she did some seasonal buying for the store but the head office had a principal buyer.
Ms. Gillespie’s remuneration was a combination of an hourly wage, a personal commission and a store commission. Her earnings between 1996 and 1999 ranged from $45,525 to $55,225.
Snowflake was generally satisfied with Ms. Gillespie’s performance but felt she was weak in some areas. In an attempt to “revitalize” or to motivate her to increase sales, Snowflake decided to transfer Ms. Gillespie to one of its other stores.
On Nov. 8, 2000, Ms. Gillespie had a meeting with two representatives of the Snowflake head office to discuss her performance. Ms. Gillespie was presented with two options: she could work at the Bayshore store, or they would part ways. When Ms. Gillespie inquired she was informed that the Hotel Vancouver store was not an option. She was not happy with this unilateral decision by Snowflake to move her to the Bayshore store.
That evening Ms. Gillespie contacted a friend who had knowledge of labour relations. Her friend told her that her transfer from the Hotel Vancouver store to the Bayshore store against her will would constitute constructive dismissal. The next day she contacted Ms. Halprin, Snowflake’s chief financial officer. She informed Ms. Halprin that she was of the view that the transfer to the Bayshore outlet was a huge demotion constituting constructive dismissal entitling her to nine month’s pay in lieu of notice.
Ms. Gillespie went on holidays on Nov. 9 for two weeks. Ms. Halprin left her a voice-mail message informing her she was scheduled to work at the Bayshore store on the Monday of her return. Ms. Gillespie faxed a letter to Snowflake on Nov. 26 stating that she did not agree with her demotion and reduction in remuneration and that she considered herself to have been constructively dismissed.
She applied for employment insurance benefits and began receiving payments by the end of December 2000. In January 2001 she began working as a manager in a Nancy Lord store being paid solely on commission with a guarantee of $3,000 per month. She quit that job on Feb. 6 and reapplied for employment insurance benefits. She stated that she quit her job because she had not been paid for the 18 days she had worked and she was required to work unpaid overtime.
Human Resources Development Canada refused to reinstate her benefits on the basis that she had quit her job without just cause.
Ms. Gillespie looked into starting her own business but concluded this was not a good idea. She held temporary jobs in April and May before obtaining a full-time job with a ladies shop in August 2001.
Ms. Gillespie brought an action for constructive dismissal against her employer. She argued that although her commission rate stayed the same, the Bayshore store generated only half of the sales of the Hotel Vancouver store thus resulting in lower remuneration for her. She also argued that the Bayshore store was less prestigious than the “flagship” Hotel Vancouver store which amounted to a demotion. The Court held that an objective observer would consider her transfer to the Bayshore store as both a demotion and a significant reduction in pay. This demotion and reduction in pay constituted a fundamental change in the contract of employment and Ms. Gillespie was entitled to consider herself constructively dismissed. The Court agreed with her assessment that she was entitled to nine months’ notice.
Snowflake argued that Ms. Gillespie had not properly mitigated her damages. Ms. Gillespie had an obligation to take reasonable steps to find another job or start a new business. The Court found that Ms. Gillespie acted reasonably to mitigate her damages by accepting the manager’s position with Nancy Lord but did not act reasonably when she quit that position. It found that Ms. Gillespie decided that the position at Nancy Lord was not a perfect job for her and acted unreasonably when she quit. The Court held that she left that position in anticipation of receiving monies from the constructive dismissal litigation.
Based on its finding of failure to mitigate, the Court awarded Ms. Gillespie damages at her full rate of pay from the time she left Snowflake until she started at Nancy Lord and the difference between her rate of pay at Snowflake and Nancy Lord for the remainder of the nine-month notice period.
For more information:
• Gillespie v. Snowflake Trading Corp., 2002 BCSC 185.
As a store manager Ms. Gillespie was responsible for all aspects of the day-to-day operations of the store including opening and closing the store, banking, security, receiving and displaying merchandise. She also hired and trained new personnel. Initially she was responsible for staff scheduling but this task was eventually transferred to head office. She did not have authority to fire people. She prepared monthly sales reports and evaluated the product lines carried by the store. Finally she did some seasonal buying for the store but the head office had a principal buyer.
Ms. Gillespie’s remuneration was a combination of an hourly wage, a personal commission and a store commission. Her earnings between 1996 and 1999 ranged from $45,525 to $55,225.
Snowflake was generally satisfied with Ms. Gillespie’s performance but felt she was weak in some areas. In an attempt to “revitalize” or to motivate her to increase sales, Snowflake decided to transfer Ms. Gillespie to one of its other stores.
On Nov. 8, 2000, Ms. Gillespie had a meeting with two representatives of the Snowflake head office to discuss her performance. Ms. Gillespie was presented with two options: she could work at the Bayshore store, or they would part ways. When Ms. Gillespie inquired she was informed that the Hotel Vancouver store was not an option. She was not happy with this unilateral decision by Snowflake to move her to the Bayshore store.
That evening Ms. Gillespie contacted a friend who had knowledge of labour relations. Her friend told her that her transfer from the Hotel Vancouver store to the Bayshore store against her will would constitute constructive dismissal. The next day she contacted Ms. Halprin, Snowflake’s chief financial officer. She informed Ms. Halprin that she was of the view that the transfer to the Bayshore outlet was a huge demotion constituting constructive dismissal entitling her to nine month’s pay in lieu of notice.
Ms. Gillespie went on holidays on Nov. 9 for two weeks. Ms. Halprin left her a voice-mail message informing her she was scheduled to work at the Bayshore store on the Monday of her return. Ms. Gillespie faxed a letter to Snowflake on Nov. 26 stating that she did not agree with her demotion and reduction in remuneration and that she considered herself to have been constructively dismissed.
She applied for employment insurance benefits and began receiving payments by the end of December 2000. In January 2001 she began working as a manager in a Nancy Lord store being paid solely on commission with a guarantee of $3,000 per month. She quit that job on Feb. 6 and reapplied for employment insurance benefits. She stated that she quit her job because she had not been paid for the 18 days she had worked and she was required to work unpaid overtime.
Human Resources Development Canada refused to reinstate her benefits on the basis that she had quit her job without just cause.
Ms. Gillespie looked into starting her own business but concluded this was not a good idea. She held temporary jobs in April and May before obtaining a full-time job with a ladies shop in August 2001.
Ms. Gillespie brought an action for constructive dismissal against her employer. She argued that although her commission rate stayed the same, the Bayshore store generated only half of the sales of the Hotel Vancouver store thus resulting in lower remuneration for her. She also argued that the Bayshore store was less prestigious than the “flagship” Hotel Vancouver store which amounted to a demotion. The Court held that an objective observer would consider her transfer to the Bayshore store as both a demotion and a significant reduction in pay. This demotion and reduction in pay constituted a fundamental change in the contract of employment and Ms. Gillespie was entitled to consider herself constructively dismissed. The Court agreed with her assessment that she was entitled to nine months’ notice.
Snowflake argued that Ms. Gillespie had not properly mitigated her damages. Ms. Gillespie had an obligation to take reasonable steps to find another job or start a new business. The Court found that Ms. Gillespie acted reasonably to mitigate her damages by accepting the manager’s position with Nancy Lord but did not act reasonably when she quit that position. It found that Ms. Gillespie decided that the position at Nancy Lord was not a perfect job for her and acted unreasonably when she quit. The Court held that she left that position in anticipation of receiving monies from the constructive dismissal litigation.
Based on its finding of failure to mitigate, the Court awarded Ms. Gillespie damages at her full rate of pay from the time she left Snowflake until she started at Nancy Lord and the difference between her rate of pay at Snowflake and Nancy Lord for the remainder of the nine-month notice period.
For more information:
• Gillespie v. Snowflake Trading Corp., 2002 BCSC 185.
