Medical Evidence not Required for Mitigation, or Mental Distress Damages
In Krmpotic v. Thunder Bay Electronics Limited, 2024 ONCA 332, the Ontario Court of Appeal found that medical evidence is not required to establish an employee’s physical inability to mitigate damages. Further, the Court considered the criteria for awarding aggravated damages, and whether they can be granted when an employer acts in bad faith.
The employee, a labourer who had worked for the company for 30 years, was terminated without cause or notice just hours after returning from medical leave, during which he was still recovering from back surgery.
The employee commenced an action claiming wrongful dismissal, seeking pay in lieu of notice, as well as damages for mental distress, and aggravated or moral damages.
At trial, the employer argued for a reduction in the notice pay, claiming the employee failed to mitigate his damages by seeking new employment. The employee argued that he was physically unable to perform significant labour during the notice period due to his ongoing recovery.
Despite advancing no medical evidence in support of his claim that he was physically unable to mitigate his damages and that he suffered mental distress, the trial judge awarded him 24 months’ notice and $50,000.00 in general damages.
On appeal, the employer again argued that the employee had failed to mitigate his damages and contended that the trial judge should have required medical evidence in its determination that the employee was physically unable to mitigate, and that he suffered mental distress as a result of his termination.
The Court of Appeal rejected the employer’s argument, holding that physical incapacity is a factual determination and does not always require medical evidence. The trial judge did not err in finding that Krmpotic took reasonable steps to mitigate his damages. While he made very little effort to find alternative employment after termination, Krmpotic was 59 years old, recovering from back surgery, and was significantly limited in his ability to perform the physical labour demanded by his work.
The Court of Appeal further dismissed the employer’s argument that mental distress evidence is necessary to justify aggravated damages, finding that this view overly narrows the employer’s duty of good faith during termination. The Court accepted on face value that, because of the manner of dismissal, Krmpotic suffered from anxiety, depression, fear, poor sleep, frustration, and feelings of helplessness, which was harm beyond the normal distress and hurt feelings resulting from dismissal. The Court agreed with the trial judge’s finding that the employer breached this duty in several ways, justifying the award of aggravated damages to the employee.
Key Takeaways for Employers
- Employers must take due care when conducting terminations; especially when dealing with long service, or injured employees.
- An employee does not necessarily require medical evidence to successfully claim they were physically unable to mitigate their losses.
- A breach of an employer’s duty of good faith may attract aggravated damages, even where the employee does not establish through medical evidence, that they suffered a diagnosable psychological injury.