In Bowes v. Goss Power Products Ltd. the Ontario Court of Appeal considered whether an employee, who is terminated without cause, is required to mitigate his or her loss when entitled to a fixed term of notice or pay in lieu, and the contract of employment is silent with respect to mitigation. The Court of Appeal held that the clause should be treated as fixing liquidated damages and there is no obligation on the part of the employee to mitigate. Accordingly, theappellant was entitled to the full amount of salary in lieu of notice as specified in the Employment Agreement, notwithstanding any salary earned from his new employer, and reversed the costs of the application in favour of the appellant.
The appellant was terminated without notice from his work at Goss Power Products Ltd. after forty-one months of employment. Under the terms of his employment agreement with the respondent, he was entitled to either 6 months notice or payment in lieu. Two weeks after he had been terminated, the appellant commenced employment with another company at the same salary he had been paid by the respondent. The respondent paid Bowes the statutory minimum under the Employment Standards Act, 2000, S.O. 2000, c. 41, of three weeks’ pay in lieu of notice, because the appellant mitigated his loss successfully. In holding that a duty to mitigate does not exist where damages are either liquidated or a contractual sum, the court overruled the decision in Graham v. Marleau, Lemire Securities Inc.(2000), 49 C.C.E.L. (2d) 289 (S.C.) which held that there exists a presumption of a duty to mitigate in employment contracts, regardless of whether the employment contract stipulates a contractually fixed term of notice or not, unless the contract of employment can be interpreted as exempting the employee (either expressly or by implication) from a duty to mitigate.
Elizabeth Severinovskaya
Mary Phan
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