If you have brought, or are considering bringing, a claim against your employer for wrongful dismissal, you may believe that you can sit back and watch daytime TV, waiting to recover your damages from the employer. That is not the case: you have a duty to “mitigate” your damages.

 Mitigating or reducing your damages by seeking alternate work

Mitigation means reducing the damages you have sustained by reason of the wrongful dismissal. Specifically, it means looking hard for new gainful employment.  The failure to properly mitigate your damages can result in your reasonable notice period damages being reduced.

Tips for mitigating your wrongful dismissal damages

• Look for reasonably comparable employment: You do not need to accept any job on offer. Your duty is to make reasonable efforts to find comparable employment.
• Keep records: It is important that you keep a record of your efforts, both in a hard copy and electronic file.  You should keep track of everything, including on-line searches, interviews, letters sent out and received, coffee and lunch meetings, etc.  At some point you may well be asked by a lawyer for your former employer what you have done to mitigate your damages.  These steps will ensure that have a complete answer.
• Keep track of any expenses incurred: As part of mitigation, you may incur some expenses—for example, to obtain training or to start a small business.  It may be possible to claim certain of these costs from your former employer.

Mitigating by continuing to work for the employer

Issues of proper mitigation also arise in constructive dismissal cases.  If, for example, the employer significantly reduces your salary or demotes you to a lower position, your employer may claim that the most effective form of mitigation consists of remaining in your former lower position for the length of the reasonable notice period.  When an employee is entitled to walk away in a constructive dismissal matter is a difficult one, requiring specialized advice from an employment lawyer.

We are here to help: Consult one of our experienced employment lawyers at Raven, Cameron, Ballantyne and Yazbeck LLP if you are considering making a claim for wrongful dismissal. 

 [The following information applies to non-unionized employees. This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]

On December 11, 2014, Lancaster House is holding its annual Toronto Labour Arbitration conference, with workshops taking place before and after. David Yazbeck will be acting as the Union-side Co-chair for the conference and will participate as a moderator on a number of panels. Andrew Astritis will be speaking as union counsel on the panel dealing with family status discrimination.

Lancaster House is a leader in providing information on labour, employment and human rights law. Both Mr. Yazbeck and Mr. Astritis have participated in Lancaster House activities before. 

No matter what kind of employment problem you are facing—e.g. a claim for wrongful dismissal, constructive dismissal, or a human rights complaint—you may ultimately decide to settle your case for some form of compensation, rather than proceeding to a hearing. In that case, it is worth taking the time to think about the best way to structure your settlement agreement because different kinds of agreements and different kinds of compensation can lead to a wide range of tax consequences.

Seven key considerations in structuring a settlement agreement:

1. Compensation for lost income is fully taxable under the Income Tax Act because it is treated like any other employment income.
2. Compensation for the loss of employment, such as severance pay or reasonable notice (see: What is reasonable notice? ), is also fully taxable under the Income Tax Act. Unless certain limited exceptions apply, these kinds of compensation are considered “retiring allowances” under the Income Tax Act.
3. If part of your employment with your employer took place prior to 1996, you can roll a portion of a retiring allowance payment into an RRSP. The roll-over is tax-free, and you do not need existing room in your RRSP to roll-over eligible amounts. Similar rules exist for any part of your employment that took place prior to 1989.
4. Compensation for damages, such as for mental distress or pain and suffering, are not subject to tax. Damages must be reasonable, however, and there must be some proof to support the claim for damages. The claim for damages also has to be independent from the loss of employment. If the mental distress was caused by the loss of employment, then any damages for mental distress will be considered part of employment income or a retiring allowance and will be taxable.
5.  Damages for human rights violations are also non-taxable. Like damages for mental distress, they must be reasonable and similar to what a human rights tribunal might award. Be especially careful because, in some jurisdictions, legislation puts a maximum cap on damages for human rights in a tribunal’s award. In those cases, the amount characterized as human rights damages in the settlement agreement cannot go over the cap.
6.  Compensation for counselling services is not subject to tax. “Counselling services” have been defined to include job placement, re-employment, and retirement counselling services.
7.  Compensation for legal fees is deductible for employees. Where the payment is made directly from the employer to the employee’s legal adviser, this amount is non-taxable.

Conclusion

Both employees and employers need to take time to consider the structure of the settlement agreement and how to characterize any compensation changing hands. While the parties can reach agreements that maximize the benefits of the settlement for both sides, any settlement must be reasonable and grounded in the facts of the case. An unreasonable settlement agreement may be reviewed by the Canada Revenue Agency. For help determining the best structure of your settlement agreement, you should seek advice from an employment lawyer.

We are here to help: Consult one of our experienced employment lawyers at Raven, Cameron, Ballantyne and Yazbeck LLP to assist you in developing or reviewing a settlement agreement for your employment claim. 

[This article is for informational purposes only and does not constitute legal advice, which cannot be given without consideration of your individual circumstances.]

On December 17, 2014, David Yazbeck will be moderating the Lancaster House Panel on Harassment and the Toxic Work Environment: Examining Rights and Remedies. This is one of a series of audio conferences presented by Lancaster House on a variety of topics affecting the workplace. Mr. Yazbeck has often acted as a moderator and speaker on these conferences.

For more information about this particular audio conference, visit the Lancaster House website here.

Raven, Cameron, Ballantyne & Yazbeck is pleased to announce that David Yazbeck has been appointed to a working group established by the CSA Group to develop and publish a whistleblower guideline for Canada. The CSA Group (formerly the Canadian Standards Association) is a world leader in establishing standards in a variety of areas. Recently, CSA Group, together with the Bureau de normalisation du Quebec, established a national standard of Canada in relation to psychological health and safety in the workplace.

David Yazbeck is one of the leading practitioners in the area of whistleblower law. He is one of many experts or interested persons who have been appointed to the CSA Group working group to establish a whistleblower guideline.

On April 23, 2013 the Public Service Labour Relations Board (PSLRB) upheld the Public Service Alliance of Canada’s complaint against the Treasury Board and Canada Border Services Agency (CBSA). The PSLRB found that the Treasury Board and CBSA violated the statutory freeze on terms and conditions of employment by terminating a long-standing practice of granting union officers full-time union leave with pay. This important decision clarifies the law on the statutory freeze period in the federal public sector and establishes the PSLRB’s approach to the issue of the time limits for making statutory freeze complaints. The case was argued by Andrew Raven with assistance from Dayna Steinfeld of Ravenlaw.

We are proud to introduce Ravenlaw’s new blog, Writing for Working People! Our firm has over 125 combined years of experience representing employees and unions in all aspects of labour and employment law. We have specialized expertise in a variety of areas, including federal public service employment, wrongful dismissal, human rights, administrative law, judicial review, and disability benefits. This blog is part of a new effort to share the benefit of that expertise with our clients and the community through our new Ravenlaw website. We have also posted the first group in a series of articles providing general legal information on topics in our areas of expertise.

On Writing for Working People, we will be providing regular updates and commentary on issues that impact workers’ rights, including: recent court decisions, changes to labour and employment-related legislation, and other legal and political topics affecting unions and workers across the country. Please check back regularly for the latest posts!

On May 2, 2013, James Cameron and Andrew Astritis each presented at the 2013 Accommodation Law Conference in Ottawa, sponsored by Labour Law Online.ca, the Centre for Labour-Management Development.  Their presentations addressed Workplace Policies and the Duty to Accommodate, Discipline, Discharge and the Disabled Employee, Accommodating Family Status, Disabilities requiring special Accommodation, as well as a host of other issues:
http://labourlawonline.ca/main.jsp?p=seminar_desc&seminarid=185&bndid=3&st=3

On August 30, 2013, the Federal Court of Canada quashed an Order made by the Minister of Heritage, James Moore, and cancelled a forced vote on the Canada Border Services Agency’s (“CBSA”) employees in the Frontière/Border (“FB”) group.

The Minister’s Order was made following a request by Treasury Board President Tony Clement for a forced vote on the employer’s final offer, dated May 6, 2013. Minister Moore ordered the vote without consulting or giving notice to the Public Service Alliance of Canada (“PSAC”), the certified bargaining agent representing the 7 000 plus employees affected.

PSAC successfully judicially reviewed the decision before the Federal Court of Canada. In her decision, Justice Mary Gleason emphasized the importance of the vote on PSAC’s interests. Justice Gleason found that “it would be difficult to find a decision that might more deeply affect a trade union’s interests than the decision to order a vote among bargaining unit members” and concluded that PSAC was entitled to adequate notice of the employer’s request for a forced vote and a meaningful opportunity to respond to it.

Justice Gleason noted each side’s duty to engage in good faith collective bargaining and set aside the Minister’s order, without remitting the matter back to the Minister for reconsideration: “the decision of the Minister to order a vote among the employees in the FB bargaining unit on the Employer’s final offer will be set aside. And, since the decision directing the vote is being quashed, the activities currently being undertaken by the PSLRB to conduct that vote must cease as there is no longer any decision to authorize them.”

PSAC was represented by Andrew Raven and Wassim Garzouzi of Raven, Cameron, Ballantyne & Yazbeck LLP/s.r.l.

Read the PSAC’s press release.