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Notice Extension for Bad Faith Dismissal: A Remedy Divorced From the Wrong

By Kornfeld LLP (posts)

The effect of the decision of the Supreme Court of Canada in Wallace v. United Grain Growers Ltd.1 is irrefutably significant in the development of the law of wrongful dismissal in Canada. In Wallace, the Supreme Court reviewed the law of wrongful dismissal in the context of the manner of dismissal by the employer and chose to recognize both bad faith and unfair treatment on the part of the employer at the time of the termination of employment as factors additional to those traditionally considered in determining and otherwise extending reasonable notice in wrongful dismissal cases.

However, the question the Supreme Court of Canada did not address in the Wallace decision because the facts did not warrant it, but one that will be of interest to many plaintiffs and plaintiffs’ counsel, is whether bad faith dismissal damages are subject to an employee’s obligation to mitigate damages in wrongful dismissal cases. More specifically, if a wrongfully dismissed employee, who otherwise qualifies for bad faith dismissal damages within the meaning of the Wallace decision, secures alternative employment immediately, or within a very brief period thereafter, or fails to take reasonable steps to obtain equivalent employment elsewhere, will such employee’s bad faith dismissal damage claim be limited, curtailed, compromised or perhaps even extinguished? As a preamble to this discussion, it is perhaps instructive to discuss more fully the Supreme Court’s decision in Wallace, as well as the nature and scope of an employee’s duty generally to mitigate in wrongful dismissal cases.

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