Employee failed to mitigate by moving to another town

Quesnelle v. Camus Hydronics Ltd., 2022 ONSC 6156

The plaintiff, Quesnelle, commenced an action alleging constructive dismissal against his former employer, the defendant, Camus Hydronics Ltd. (“Camus”).  The judge ruled that the Quesnelle had been constructively dismissed due to the removal of benefits that made up a significant part of his overall compensation.  The judge also determined that the termination clause in Quesnelle’s contract was unenforceable.  Quesnelle was awarded common law reasonable notice, which was discounted by Quesnelle’s failure to mitigate.

The Facts

Quesnelle was recruited to work for Camus in 2014 as a HVAC specialist.  Quesnelle agreed to work for Camus after they agreed to pay for a vehicle and all of its operating expenses, including highway tolls, which was an important consideration since Quesnelle lived in Oshawa and Camus was located in Mississauga, about 80 kilometres away.

Quenelle’s employment agreement contained a termination clause as follows: “During your Probation Period and afterwards, you will be entitled only to notice of termination, termination pay and/or severance pay as required by the Ontario Employment Standards Act.”  It is noteworthy that the employment agreement did not refer to the vehicle benefits, however Camus paid those benefits for 7 years.

Camus paid for Quesnelle’s vehicle and operating costs until 2021 when he notified his supervisor that his vehicle, a truck, was no longer roadworthy.  The truck had 409,000 kilometres on it and needed to be replaced.  In March 2021, Camus informed Quesnelle that they would not replace his truck and further that they would stop paying for his gas, insurance, and the highway tolls.  After several exchanges, Quesnelle communicated to Camus that removing these benefits amounted to constructive dismissal and accordingly he would resign in May 2021.  At the time of resignation, Quesnelle was earning $103,000, plus benefits.

Shortly after resignation, Quesnelle sold his home and moved 70 kilometres to Omemee.  In June 2021, Camus offered to re-employ Quesnelle and provide a fully paid vehicle for a year, pay his lost salary, and contribute towards his legal expenses.  Quesnelle declined as he had already moved and this added 40 minutes to his previous commute.

Issues and Decisions

Issue 1 – Constructive dismissal

The judge found that excluding the cost of a new vehicle, the vehicle benefit was still worth approximately $30,000 a year, or 21% of Quesnelle’s total compensation.  The judge found that Quesnelle had been constructively dismissed as the truck benefits were an essential term of his employment, despite not being in the employment agreement.

Issue 2 – Termination clause unenforceable 

The judge found that the termination clause, that attempted to limit Quesnelle’s notice entitlement to the ESA minimums was not enforceable.  The judge focused on the termination clause “you will be entitled only to notice of termination, termination pay and/or severance pay as required by the Ontario Employment Standards Act” and found the words “only” and “and/or” were unclear and ambiguous.  The word “only” did not allow for the provision of benefits, and “or” did not make sense as there would never be a scenario where the employee would receive termination pay or severance pay.  Therefore, the termination clause was found to be unenforceable.

Issue 3 – Common law reasonable notice

As the judge found that Quesnelle was constructively dismissed and that the termination clause was unenforceable, Quesnelle was entitled to 10 months of reasonable notice.

Issue 4 – Mitigation

The judge found that Quesnelle’s rejection of Camus’ offer of re-employment was not a failure to mitigate as he no longer had reason to live within commuting distance to Camus’ headquarters after termination.  The judge did note that his conclusion would be different if Quesnelle had not moved away. 

The judge also found that Quesnelle did fail to mitigate his damages with respect to his move to Omemee, where there were less jobs in his field.  Accordingly, the judge reduced Quesnelle’s entitlement by 30 percent.

Notes to Employers

When making a significant change(s) to an employee’s role, responsibility, or in this case compensation, it is important to consider if that may be characterized as constructive dismissal. 

It is also important for all employers to ensure that they have enforceable written employment agreements with all of their employees.  If not, the employer risks having to provide payment in lieu of common law reasonable notice upon termination without cause, which can be worth several months.  This means employers should use written employment agreements and have them reviewed periodically by legal counsel to make sure they are enforceable.  As in this case, the judge found that the addition of two words “only” and “or” made the termination clause unenforceable.