Ontario courts have confirmed that employees may obtain wrongful dismissal damages, including pay in lieu of reasonable notice, even before the full notice period has expired. This is a critical issue in employment litigation and one that experienced Toronto employment lawyers routinely address.
Early Judgment for Wrongful Dismissal Damages
Ontario courts recognize that wrongful dismissal damages are generally assessed as of the date of termination, subject only to the employee’s ongoing duty to mitigate:
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Markoulakis v. SNC-Lavalin Inc., 2015 ONSC 1081 (CanLII), at para. 9
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Cormier v. 1772887 Ontario Limited c.o.b. as St. Joseph Communications, 2019 ONSC 587 (CanLII), at para. 80
This means an employee does not need to wait until the reasonable notice period has fully elapsed before seeking judgment. Courts can, and frequently do, grant judgment partway through the notice period.
Duty to Mitigate After Judgment
When judgment is granted before the end of the reasonable notice period, the employee remains obligated to mitigate throughout the remainder of that period:
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Markoulakis v. SNC-Lavalin Inc., at para. 8
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Cormier v. 1772887 Ontario Limited, at para. 80
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Ruel v. Air Canada, 2022 ONSC 1779 (CanLII), at para. 40
Ontario employment law jurisprudence has developed three primary approaches for dealing with mitigation following early judgment.
How Ontario Courts Handle Mitigation After Early Judgment
1. The Contingency Approach
Under this approach, the court discounts the employee’s damages by applying a contingency for potential re-employment during the balance of the notice period:
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Markoulakis v. SNC-Lavalin Inc., at para. 12
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Cormier v. 1772887 Ontario Limited, at para. 81
This approach reflects the uncertainty of future mitigation while still allowing damages to be fixed early.
2. The Trust and Accounting Approach
Courts may award a lump-sum judgment, but impose a trust obligation requiring the employee to account for mitigation earnings during the remaining notice period:
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Markoulakis v. SNC-Lavalin Inc., at paras. 12–13
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Cormier v. 1772887 Ontario Limited, at para. 81
In Ruel v. Air Canada, the Ontario Superior Court adopted this approach and ordered that remaining payments be made to plaintiff’s counsel in trust, subject to adjustment based on any mitigation income earned before the notice period expired (para. 41).
3. Partial Summary Judgment Approach
Courts may grant a partial summary judgment, with the parties permitted to return to court during or after the notice period to address further compensation, depending on mitigation:
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Markoulakis v. SNC-Lavalin Inc., at para. 12
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Cormier v. 1772887 Ontario Limited, at para. 81
In Markoulakis, the court ordered monthly compensation payments for the balance of the reasonable notice period, subject to deductions for mitigation earnings (para. 40).
When Courts May Decline These Approaches
Ontario courts may decline to apply any of these mitigation-management frameworks where there has been no failure to mitigate during a significant portion of the notice period:
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Cormier v. 1772887 Ontario Limited, at para. 82
This underscores the importance of documenting mitigation efforts, both for employees seeking damages and employers disputing them.
Fixed Notice Clauses and No Duty to Mitigate
These wrongful dismissal principles must be distinguished from cases involving employment agreements that fix notice or payment in lieu, and are silent on mitigation.
In such cases, the Ontario Court of Appeal has held that the contract may amount to liquidated damages, meaning the employee may have no obligation to mitigate:
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Bowes v. Goss Power Products Ltd., 2012 ONCA 425 (CanLII), at paras. 34 and 61
If parties intend for mitigation to apply in a fixed-notice contract, that intention must be set out in clear and explicit language:
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Bowes v. Goss Power Products Ltd., at para. 62
Speak With a Toronto Employment Lawyer
Wrongful dismissal claims—particularly those involving early judgment, mitigation, and contractual notice provisions—require careful legal strategy and a deep understanding of Ontario employment law.
Z Legal P.C. represents employees and employers across Toronto and the GTA in wrongful dismissal, constructive dismissal, severance disputes, and employment contract litigation.
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