Earning during the notice period.
Hilary Page
Employment lawyers fight about the size of this package! Our arguments either for or against making it larger all revolve around how long it will take the employee to get a new, comparable position.
How long will it take to re-employ?
The court assesses how long they think it should take by considering four factors:
- The employee’s age
- The employee’s length of service
- The character of the employee’s job
- The availability of comparable roles in the specific job market
Side hustle money or taking a job out of necessity
Some people might re-employ right away but maybe not in a comparable position. This can be the economic reality for many people who don’t leave their positions with generous packages and who can’t stop earning while they wait for the perfect job.
Others might start earning money by ramping up their existing side hustle or start a new business. These situations raise questions about whether the money the terminated employee is earning should be offset from the notice damages that the employer would otherwise owe.
How will a court treat these earnings?
Remember that a former employer’s liability for the notice package is determined by how long it will take the employee to re-employ in a comparable position.
When an employee starts making money the former employer will try to limit their liability by arguing that the money the employee is making, be it from employment that is not comparable, or a side business, is “mitigation earnings” that should be deducted from the notice package the former employer would otherwise have to pay.
Case Study: Brake v. PJ-M2R Restaurant Inc.
A court will consider whether the new job is comparable. The trend following the Ontario decision in Brake v. PJ-M2R Restaurant Inc. (“Brake”) is that if the job is inferior in pay or responsibility then the income earned will not be deducted. In Brake the former employee was a McDonald’s restaurant manager making a salary of $63,000 per year. During the notice period, out of economic necessity, she took a cashier position at Home Depot, earning $12.50 per hour.
The court did not deduct the employee’s Home Depot earnings from McDonald’s notice liability. This was because the judge decided the Home Depot job was inferior to the McDonald’s job and therefore the employment was not comparable. The Ontario Court of Appeal did not overturn this finding.
Contact Greenwood Law for guidance
It is important that a terminated employee makes good efforts to find comparable new employment. If an employer can prove that the employee did not make good efforts and if they had they could have re-employed in a comparable position then the income they might have earned can be imputed to them, reducing the employer’s liability.
Need help?
If you have questions about how to think about your job search post-termination, get in touch!
