When an employee is dismissed without cause, the law requires that they receive reasonable notice or pay in lieu of notice. How that notice is calculated, and whether damages may be reduced if the employee fails to look for new work, remains a highly fact-driven exercise. A recent decision of the Alberta Court of Justice, Hill v. Canyon Dental Centre Ltd., provides important guidance on these issues for both employers and employees.

Employee Terminated After 14 Years of Service With Employer

The plaintiff employee had been employed with Canyon Dental Centre Ltd., the employer, since 2008. She worked part-time as a receptionist, primarily on Saturdays, earning $30 per hour. In addition to her wages, she had access to a $500 annual health spending account and enjoyed dental benefits provided by her employer.

On October 1, 2022, the employer terminated the employee. She was 42 years old at the time of dismissal and had spent over 14 years with the clinic. The employer provided two weeks’ pay in lieu of notice, amounting to $420.

Following her termination, the employee brought an action seeking pay in lieu of notice, lost benefits, and $20,000 in punitive damages. The employer contested the amounts sought, arguing that the employee’s claim for notice was excessive, that punitive damages were unwarranted, and that she had failed to mitigate her losses by not making sufficient efforts to find new work.

Determining Reasonable Notice

The landmark decision in Bardal v. Globe & Mail (1960) is the starting point for wrongful dismissal cases. Courts consider several factors when setting a notice period, including the employee’s age, length of service, position, and the availability of similar employment.

The employee sought 15 months’ notice, citing cases involving long-term or specialized employees. The employer argued for 8 to 12 months, pointing to cases with employees in administrative or dental assistant roles.

The Court found the employer’s authorities more persuasive. The employee’s role was administrative in nature and similar positions were shown to be widely available in the Calgary market. Considering her age, years of service, and position, the Court set the reasonable notice period at 10 months.

The Duty to Mitigate

Under Canadian employment law, wrongfully dismissed employees must take reasonable steps to mitigate their damages by looking for comparable work. The employer bears the burden of proving two things:

1. The employee failed to make reasonable efforts to find new employment; and
2. Comparable employment opportunities were available.

The Court found the employee’s job search efforts to be inadequate. She delayed looking for work for over two months, sent only sporadic emails to potential employers, and limited her search to Saturday-only positions within dental clinics. She applied to only four of the 133 comparable positions the employer identified on job sites such as Indeed and Kijiji.

Moreover, evidence from dental practice owners confirmed there was a high demand for administrative staff during the notice period. The Court concluded that the employee had not met her duty to mitigate.

Reducing the Notice Period for Failure to Mitigate

Having established that the employee did not reasonably mitigate her losses, the Court had to determine the consequences. In Constantinoff v. Racine, the Saskatchewan Court drastically reduced an employee’s damages when the employee could have continued working under equivalent terms but chose not to.

In the employee’s case, the Court recognized that she declined at least one offer of comparable employment but accepted that individuals may have personal reasons for refusing a job. Nevertheless, the existence of that offer demonstrated that similar work was available.

The Court reduced the reasonable notice period from 10 to eight months to reflect her failure to mitigate.

Treatment of Other Income During the Notice Period

The employer argued that the employee’s damages should be reduced by the income she earned from other sources, including her part-time role at another dental practice and income attributed to her from her spouse’s business.

The Court disagreed. The employee had already been working concurrently at the other dental office with the employer, and those hours did not increase after her termination. As such, that income was considered supplementary, not replacement income. Similarly, the income reported from her spouse’s business was for tax-splitting purposes only, and the employee did not receive direct compensation. Neither source of income was deductible from her damages.

The Claim for Punitive Damages

Punitive damages are reserved for exceptional cases involving malicious or high-handed conduct. The employee’s counsel argued that punitive damages were justified because the employer initially relied on an employment agreement with restrictive termination clauses, only abandoning that defence on the eve of trial. They also argued that requiring the employee to sign the agreement immediately upon returning from maternity leave was discriminatory.

The Court rejected these arguments. It noted that pleading reliance on an employment agreement is common in employment litigation and that withdrawing such a defence is not in itself misconduct. While the employer’s decision to require the employee to sign the agreement upon her return from maternity leave was ill-advised, it did not rise to the level of malicious or reprehensible conduct required for punitive damages.

Accordingly, the claim for punitive damages was dismissed.

Benefits Not Awarded Due to Other Coverage

The Court awarded the employee eight months of pay in lieu of notice, minus amounts already paid. It also granted the employee an amount representing the prorated value of her lost health spending account.

No damages were awarded for dental benefits, as the employee continued to receive coverage through Rockyview. Punitive damages were denied. The Court left the issue of costs open for later submissions.

Key Takeaways on the Duty to Mitigate

For Employers

This case highlights several important lessons for Alberta employers:

1. Notice periods remain fact-driven. Courts will weigh Bardal factors carefully, but where there is evidence of a strong job market, reasonable notice periods may be on the shorter side.
2. Mitigation evidence matters. The employer’s ability to demonstrate a vibrant labour market, including numerous comparable job postings, was central to reducing the notice period. Employers facing wrongful dismissal claims should consider gathering similar evidence.
3. Punitive damages are exceptional. Courts are reluctant to impose punitive awards unless the employer’s conduct is malicious or egregious. Standard litigation tactics, even if abandoned later, do not typically qualify.
4. Concurrent employment income may not reduce damages. If the income is supplementary and not replacement income, employees can retain it without deduction from their damage award.

For Employees

For employees, the decision underscores the importance of taking proactive steps after termination:

• Document your job search. Courts expect employees to show they made genuine efforts to find new work. Keeping records of applications, job postings, and networking efforts is crucial.
• Be open to comparable roles. Limiting applications to very narrow hours, duties, or employers may undermine claims for damages.
• Understand that punitive damages are rare. Even conduct that feels unfair may not meet the high legal standard required.

Lengthy Employment Tenures vs. The Duty to Mitigate After a Job Loss

Hill v. Canyon Dental Centre Ltd. demonstrates how Alberta courts balance the principles of reasonable notice and mitigation in wrongful dismissal cases. While the employee’s long tenure supported a significant notice period, her limited job search efforts ultimately reduced her damages.

For employers, the case shows the value of documenting available job opportunities when contesting wrongful dismissal claims. For employees, it serves as a reminder that failing to take mitigation seriously can result in a meaningful reduction of compensation.

Getz Collins and Associates: Trusted Calgary Employment Lawyers Advising on Wrongful Dismissal

If you have questions about termination, wrongful dismissal, or mitigation obligations in Alberta, contact the employment lawyers at Getz Collins and Associates. We can help you understand your rights and obligations, whether you are an employer or employee navigating the challenges of dismissal. To book a confidential consultation, please call us at (587) 391-5600 or contact us online.