A recent BC Supreme Court case highlights how employees have an obligation to mitigate their damages by searching for comparable employment after termination. The case also confirms that 24-months is the upper limit of common law reasonable notice in BC.
In Okano v. Cathay Pacific Airways Limited, 2022 BCSC 881, the plaintiff, Ms. Okano, was 61 years old and had been employed by the defendant airline for almost 35 years, rising through the ranks to manager of the Cathay Pacific’s Vancouver office. She was the most senior person in her department, and oversaw a group of 71 employees.
In October 2020, Cathay Pacific advised Ms. Okano that it was closing its Vancouver office and that her employment would be terminated effective December 2020. In the interim, Ms. Okano handled the transfer of the Vancouver operations to Cathay Pacific’s office in Manila as well as the closing of the Vancouver office. She trained the Manila staff and terminated the 71 employees she supervised in Vancouver.
Ms. Okano did nothing to search for new employment until February 2021. At that time she created a résumé and began searching online job sites. From April through June 2021 she attended eight sessions with a leadership-coaching consultant and began to actively apply for jobs outside the airline industry but without success. There was evidence of several job postings in the airline industry for positions comparable to her former position.
Ms. Okano brought a wrongful dismissal action against Cathay Pacific. She argued that she was entitled to pay in lieu of reasonable notice for a period in excess of 24 months.
The Court confirmed that 24 months is the upper limit. The Court assessed reasonable notice in this case at 24 months given Ms. Okano’s age, length of service and management status. The Court also re-affirmed that the mere fact that Ms. Okano was a long-service managerial employee was not an “exceptional circumstance” warranting a notice period longer than 24 months.
The Court further found that Ms. Okano had failed to mitigate her damages. Even though she had applied widely for jobs, she failed to apply for available opportunities in the airline industry. The Court found it was incumbent upon Ms. Okano to apply for similar jobs in the airline industry, where she had spent almost her entire career, and that her failure to do so was unreasonable and constituted a failure to mitigate. As a result, the Court deducted three-months from its assessment of damages. The Court awarded a further 15% contingency deduction for the potential that Ms. Okano would find employment during the balance of the notice period – this further reduced Ms. Okano’s award to 19 months of pay in lieu of notice.
Takeaways for Employers
This decision provides a helpful illustration of an employee’s obligation to mitigate. Employees must mitigate their damages upon termination by making concerted efforts to find comparable employment. Their job search efforts will be scrutinized and they cannot unreasonably confine their efforts.
The decision also reaffirms the 24-month upper limit of reasonable notice in British Columbia and demonstrates that the “exceptional circumstances” warranting a greater period must be truly exceptional.