Termination of Employment and The Duty to Mitigate
By: Mark Hundleby (Mark Hundleby)
If an employee in British Columbia is not unionized, his or her employer can terminate that employee for reasons that range from legally justifiable to vaguely outrageous. A critical determination is whether the reasons for termination are “just cause” for dismissal. If a dismissal is for just cause, the employee is not entitled to notice or severance; if a dismissal is “without cause”, the employer has an obligation to provide reasonable notice or severance to the employee.
“Just cause” is a legal term for a situation where an employee has breached his or her employment agreement so grievously that the employer is legally justified in ending the employment relationship. Employees have obligations to their employers that may not be explicitly stated or written out in their employment agreements. Those obligations generally include the obligations to be trustworthy, reliable, responsible, respectful, and competent. Therefore, just cause can include theft, lying, absenteeism, gross insubordination, and incompetence. Just cause also includes commission of a criminal offence using company property or on company time. Sometimes some of the above causes can occur and be minor enough so as not to result in termination of employment. However, an employer can warn an employee for such behaviour, verbally or in writing, or both, and if the employee continues to amass warnings the employee can be fired for just cause based on the collective warnings and incidents even if one or more of the incidents is not sufficient to be just cause when viewed in isolation.
If an employer alleges, and has the evidence to prove, that an employee has been terminated “with cause”, the employee is not entitled to any compensation whatsoever, other than payment of wages and vacation time accrued prior to termination. If the employee’s termination is for reasons that do not meet the high standard of “just cause”, even if the employee’s performance is deficient in some way, the employee is entitled to reasonable notice or severance.
If an employer terminates an employee or gives notice that it will terminate an employee “without cause”, that termination triggers two obligations, one of the employer, and one of the employee. The employer’s obligation is to give the employee “reasonable notice” of the termination. The Employment Standards Act of British Columbia sets out a minimum amount of notice based entirely on the employee’s length of service. At “common law” - precedents set by decided cases - reasonable notice is generally more than the minimums set out in employment legislation. Under the common law, reasonable notice is calculated based on the employee’s length of service, the character of their employment, their age, and the availability of similar employment having regard to the experience, training and qualifications of the employee. The employer can discharge its obligation to give reasonable notice by giving advance notice of termination and allowing the employee to work until that date, by paying severance in lieu of reasonable notice, or by a combination of the two.
The employee’s obligation upon termination of their employment is to mitigate their loss, meaning to make reasonable attempts to replace the employment income that was lost. If an employee fails to mitigate, the employer may be entitled to withhold some of the notice or severance that the employee would be otherwise entitled to receive. An employee should generally try to mitigate by finding another job, although acceptable alternative attempts to mitigate may include starting a home-based business, otherwise pursuing self-employment, or even by pursuing additional job training or education. An employee also only has to show reasonable efforts to mitigate, by being able to provide proof and/or testimony that he or she looked at job advertisements, applied for suitable jobs, contacted potential employers, and engaged in similar activities to try to find replacement income. An employee is not required to mitigate his or her losses by taking a job that is “unreasonable” for them to take, but the definition of what is unreasonable in the circumstances can be flexible. Reasonable mitigation may involve accepting a job that is not equivalent in duties to one’s previous position, and could involve an obligation to move to an area where one’s skills and abilities are in high demand.
If you have questions or comments about this article, or about how the concepts involved might affect your own personal legal situation, please feel free to contact me. Please note that this article is a general statement of concepts currently applicable in employment law, which may or may not apply to your own personal legal situation. This article is not to be interpreted as legal advice. The author, the author’s law firm, and any of the author’s affiliates, without limitation, shall not be held liable for reliance upon this article.