When an employee commences an action for wrongful dismissal that employee has an obligation to take reasonable steps to find a new job comparable to the one they had before. In legal terms, this is known as the employee’s “duty to mitigate.” Generally, employers are responsible for any reasonable costs incurred by an employee in their search for a new position. In some cases, terminated employees have claimed the expenses incurred in connection with selling and buying a new home if they accept a new position in a different city or other location. This was the very issue that was raised in a recent case, Robinson v. H. J. Heinz Company of Canada LP, 2018 ONSC 3424 [“Robinson v Heinz”].
In Robinson v Heinz, the Court found that the Plaintiff, Karen Robinson, had been constructively dismissed as a result of certain unilateral changes to the terms and conditions of her employment made by her employer, Heinz. As a result, the Court found that the Plaintiff was justified in treating her employment at an end and claiming a severance package from Heinz. In that regard, the Court also found that the Plaintiff’s decision to 1) take a new position in Southwestern Ontario and 2) sell her home in Mississauga and purchase a new home in Southwestern Ontario was reasonable.
The interesting legal question, however, was whether the costs associated with the sale of the Plaintiff’s home in Mississauga and the purchase of the replacement home in Southwestern Ontario were recoverable from the employer. After reviewing previous case law on the same point, Justice Stinson found that the weight of authority in Ontario supports the proposition that where a terminated employee accepts a new position in a new location and by necessity is forced to sell their home, the costs associated with the move and purchase and sale are recoverable. As a result, the Court awarded the following damages, in addition to wrongful dismissal:
- $338.00 as compensation for the added expenses the Plaintiff incurred for the one month when she owned the new home and the Mississauga home;
- $33,672.32 in expenses on the sale of the Mississauga home (real estate commission, listing costs, mortgage pre-payment penalty, mortgage discharge fees and legal fees);
- $3,500 for land transfer taxes, legal fees, and related expense incurred on the acquisition of the new house; and
- $7,500 for moving and transitional expenses
=TOTAL of $45,010.32
Justice Stinson’s decision appears to confirm that where an employee is terminated and a new position is accepted elsewhere, the employer is liable to pay the employee’s expenses related to the sale of their current home and purchase of a new home. The facts of each case, however, are unique. Justice Stinson’s decision to award the Plaintiff’s expenses associated with the sale of the Mississauga home and purchase of the new home were informed by the following facts:
- Only several years before her constructive dismissal, the Plaintiff was induced to move to Toronto from her home in Leamington, Ontario (which is situated in Southwestern Ontario) to take on a more senior role with Heinz; and
- After her constructive dismissal and by accepting the new position in Southwestern Ontario, the employer’s liability to the Plaintiff for pay in lieu of notice (i.e severance pay) was significantly reduced.
Accordingly, while the decision in Robinson v Heinz seems to clarify that real estate costs are recoverable, it also appears that the court must be satisfied that the Plaintiff’s decision to move is, in all the circumstances, reasonable. Employees should not expect that if they are terminated they have a free pass to relocate on their employer’s dime. For example, if an employee had lived their entire life in Toronto and there were many comparable positions available in Toronto, it stands to reason that if the employee decided to move to another city that their moving expenses and real estate costs may not be recoverable from the employer.
If you have been terminated and you have a new job opportunity which would require that you relocate, you should speak with a lawyer. Call Monkhouse Law today for a free 30 minute phone consultation.