Caution to Dismissed Employees: Stay in Your Own Lane
July 22, 2022
July 22, 2022
Previously printed in the LexisNexis Labour Notes Newsletter.
Okano v. Cathay Pacific Airways Ltd., 2022 BCSC 881 is a recent B.C. Supreme Court decision that provides guidance on an employee’s duty to reasonably mitigate his or her damage or losses on termination of employment.
The plaintiff, Frances Turcic Okano (“Okano”), worked for the defendant company, Cathay Pacific Airways Ltd. (“Cathay”).
She had about 35 years of service when she was dismissed from her position as manager of Cathay’s Vancouver Global Centre.
Cathay experienced an unprecedented decrease in business starting in March 2020 as a result of the COVID-19 pandemic. In an attempt to continue operations and avoid employee terminations, Cathay introduced several “Special Leave Schemes” (SLSs), which saw the company, for example, provide employees with three weeks of unpaid leave and then reduce their salaries by a set amount for a period of time.
In October 2020, Cathay advised Okano that it would be closing its Vancouver Global Centre and terminating her employment effective December 11, 2020.
Cathay offered Okano a severance package that included a refund of contributions she had made under the SLSs. The company also offered access to outplacement services through a professional advisor. Okano rejected the severance package.
In early 2021, Cathay provided Okano with the equivalent of three months of severance as required under the Canada Labour Code.
Okano slowly began her job search in February 2021, creating a resume, searching online for jobs, and working with a coaching consultant. In June 2021, she began actively applying for jobs, but only positions outside the airline industry. As of May 2022, she remained unemployed.
The Court held that Okano was not entitled to compensation for her SLS contributions. Okano had accepted the SLSs in exchange for a continuation of employment, and rejected the company’s severance package that included a refund of her contributions under the SLSs. In this regard, the Court held that an unaccepted offer “confers no legal rights … and cannot be drawn upon to ground an award in damages”.
Further, the Court held Okano had failed to take reasonable steps to mitigate her damage or losses, which warranted a three-month reduction in the notice period to which she was entitled. It was not unreasonable for Okano, after she had worked for Cathay for approximately 35 years, to need some time to come to terms with her dismissal. It was thus reasonable for her to wait until February 2021 before searching proactively for new employment.
However, Okano had a duty “to explore available positions in the very industry in which she had spent her entire working career”. Her failure to search for comparable positions in the airline industry demonstrated a failure to take reasonable steps to mitigate her damage or losses, warranting a reduction in her notice period.
Additionally, the Court held the remainder of Okano’s notice period – i.e. from the date of the trial to the end of the notice period – was subject to a contingency discount of 15 discount. In this regard, the Court accepted Cathay’s evidence that there were over 750 jobs listed in Okano’s geographical area with a similar description and job title as Okano’s former position. This led the Court to conclude that there was a real and substantial possibility she would secure a comparable position in the time remaining in her notice period.
The Court held Okano’s reasonable notice period to be 24 months – less the termination pay in lieu of notice already provided, the three-month reduction for failure to properly mitigate and the contingency discount. Okano was also entitled to special damages for the cost of her career coach.
This decision serves as a caution to dismissed employees. In order to satisfy the duty to mitigate alleged damage or losses, an employee must search for comparable positions in his or her industry or area of experience. Failure to do so might result in a reduction in his or her claim for damages over the relevant notice period.
This decision also provides a reminder that if an employer is served with a wrongful dismissal claim, it should diligently record the job opportunities available to an employee with the dismissed employee’s skill set. As demonstrated here, where there is evidence of several opportunities for similar positions and the dismissed employee has failed to apply for those positions, his or her claim for wrongful dismissal damages may be subject to a reduction for failure to properly mitigate or a contingency discount may be applied.
Kate M. Jones is a lawyer at the Vancouver-based employment and labour law firm, Roper Greyell LLP. She works all areas of workplace law, including employment, labour, workplace human rights and privacy law. Kate advises clients on all issues that arise in the workplace and can be reached at email@example.com.
Talia Behrmann is a summer student at Roper Greyell. She enjoys working in all areas of employment and labour law.
For further information about Kate and Talia and the rest of the Roper Greyell team, please visit www.ropergreyell.com.
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.