Employee did not fail to Mitigate Despite Retirement and Rejection of Reasonable job Offer

In Dussault v. Imperial Oil Ltd., the Ontario Superior Court of Justice held that two employees who had worked for Imperial for more than 39 years and 36 years respectively were entitled to 26 months’ notice of termination. Both employees participated in a defined benefit pension plan.

The employees, who both worked in Imperial’s retail store division, were advised in 2015 of a possibility of a sale to Mac’s Convenience. Both employees were offered positions with Mac’s. The offers of employment from Mac’s guaranteed the same salary for the employees for 18 months in comparable management positions, with participation in a defined contribution plan and group benefits. The benefits were considered to be less favourable than the benefits enjoyed with Imperial. Imperial also offered to pay the employees a gratuitous lump sum payment to compensate the employees for these reduced benefits but refused to disclose the exact amount of the payment until after they accepted employment with Mac’s.  After 18 months, their salaries would likely be reduced. Both employees refused to accept the offers of employment from Mac’s considering the terms of employment to be less favourable. Both employees elected to retire and started collecting from pension benefits. Unsurprisingly, neither had found new employment since their terminations from Imperial.

Imperial argued that the employees should have accepted the offers of employment from Mac’s. The duty to mitigate, according to the Supreme Court of Canada, requires an employee to make reasonable efforts to find alternative sources of income that flow from the loss of employment. The law only requires employees to search for comparable employment. The law also places the onus on the employer to prove that reasonable steps were not taken by the employee. The Court found that there were “sufficient differences” to make the rejection of the offers reasonable. The Court found that the benefits and salary were less favourable. On benefits, there seemed to be consensus that the benefits offered by Mac’s were less favourable, but Imperial offered to pay a lump sum to offset that difference. Imperial did not disclose the amount of the lump sum payment, and this was a problem for the Court. The salary was viewed as the Court as less favourable, even though it was to be the exact same salary for 18 months. Mac’s would not tell the employees what their salary would be after 18 months, and the releases would have precluded a lawsuit against Imperial for any differences. The Court said that this factor alone rendered the offer as not comparable. Respectfully, the decision is flawed and is inconsistent with principles of mitigation that have been recognized by the Supreme Court of Canada. The result is that an employee must be offered a guaranteed position, guaranteed term and guaranteed salary for the duration of an entire notice period, in order to be “comparable”, according to the Court.

Employees Entitled to Damages for Pension Losses during Notice Period

Following the initial decision in February 2018, the parties were unable to resolve the issue of damages during the 26-month notice period surrounding the employees’ defined benefit pension plan. In particular, the Court considered whether the employees were entitled to contributions that Imperial would have made during the 26-months’ notice and whether the damages should be reduced for the increase in the commuted value of their pension.

Generally speaking, the basic principle is that a terminated employee is entitled to compensation for all losses arising from the failure to provide proper notice of termination. This includes compensation for all salary and benefits that the employees would have received had they received notice of termination. Notably, following the terminations, both employees chose to retire and started receiving pension benefits. Imperial argued, with the support of an expert, that the commuted value of the pensions was actually higher than it would have been had they received 26 months of notice. Imperial argued that damages ought to be reduced as a result. The Court noted that the only reason the value of the pension was higher was because the employees started receiving payments earlier, and therefore, refused to offset the differences from damages.

At the same time, the Court rejected the employees’ demand for contributions that would have been made by Imperial. The employees suffered no pension loss. Indeed, the employees may have been in a better position financially as it pertained to the pension. The Court rejected the claim for damages equivalent to contributions that Imperial would have made during the notice period.