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March 6, 2012

How to Determine the Period of Reasonable Notice and What’s Mitigation?

Although, on occasion, we see cases that try to tweak the way in which the period of reasonable notice at common law should be determined, in the end, the tried and true Bardal test continues to win the day and there’s really no reason to change.

The most recent example is McGroarty v. Linita Design which is a Divisional Court appeal of a judgment awarding the plaintiff damages “based on a reasonable notice period of 17 months” less mitigation income.  The defendant appealed and the appeal was dismissed by the Divisional Court.

The appeal was over two issues:

The appellant submits that the trial judge erred in his determination that a 17 month notice period was reasonable having regard to all of the relevant factors.  As well, it submits that the trial judge also erred in failing to deduct all of the income the respondent earned during that notice period in mitigation of her damages.

Reasonable Notice

The Court reviewed the law with respect to reasonable notice.  Although flirting with the “month per year of service” rule of thumb relied upon by many HR practitioners as a “rough guide” for determining the period of reasonable notice and by many plaintiffs lawyers as a “hard and fast” rule, the Court ultimately, and correctly, followed the Court of Appeal decision in Minnott v. O’Shanter and rejected any “rule” for determining the period of reasonable notice.

The proponents of the “rule of thumb” approach to notice determination rely on predictability and certainty, things that are lacking in the more traditional approach to notice determination espoused by Bardal v. Globe and Mail and the hundreds of cases that have followed it.  Under the Bardal approach, the court will consider a range of factors and come up with a range of reasonable notice.

Some argue that the period of reasonable notice is intended to approximate the amount of time it would take an employee to find alternate employment and to “compensate employees for the time and effort they have invested in their employer’s business”.  According to Chief Justice McCruer in the seminal Bardal case:

There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.

The Court of Appeal in Minnott rejected the formulaic approach to notice determination:

Predictability, consistency and reasonable certainty are obviously desirable goals in employment law both for employers and for those advising employees who have been or are about to be dismissed C a point emphasized by Lacourciere J.A. in his majority reasons in Cronk. These goals, however, are best achieved by a careful weighing and blending of the Bardal and other factors relevant to the calculation of reasonable notice, by establishing reasonable ranges for similar cases, recognizing that no two cases are the same, and even by establishing upper limits for particular classes of cases where appropriate.

The Court in McGroarty found that the 17 month reasonable notice period was within the range of reasonableness.

Mitigation

The appelant also argued that the trial judge erred when he refused to deduct all mitigation income earned from alternate employment over the period of reasonable notice.   The Court in McGroarty v. Linita Design:

It is clear that this employer bears the burden of showing with evidence that this wronged employee has failed to mitigate her damages.  In the absence of proof by the employer that this employee obtained other employment of “approximately similar kind”, this employee should in fairness be entitled to recover the former salary owing arising from that number of hours required to be worked.  Certainly, it cannot fairly be said that this reduction in the hourly wage, by a full one-third, is “employment of like nature”. This was clearly an inferior employment position to that which she had previously enjoyed with the appellant. Recognizing this fact, and looking “at the entire picture”, the trial judge took into account and gave proper allowance for the “extra time and trouble” expended for the respondent to mitigate, and that at the substantially lower rate of hourly pay.

A review of the case law presented by the parties in this appeal confirms that the assessment of damages by a trial judge where an employee obtains new employment within the notice period at a substantially lower rate of pay, and with differing hours of work, remains quite unsettled in law. Having regard to the breadth of possible re-employment fact situations, our law is not so inflexible such that any and every benefit derived from complying with the duty to mitigate must in every circumstance require a deduction from the resulting damages. On the unique facts of this case, the trial judge correctly applied the law.

This case is instructive but the broad principles that the court espouse, particularly on the “unique” mitigation facts, ought to be applied with caution.