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April 1, 2009

Dismissed employees may need to relocate to mitigate their damages

Authors Malcolm MacKillop and Hendrik Nieuwland

Recessionary global financial markets and rising unemployment have made it increasingly difficult for terminated employees to find alternative work, especially in industries like construction, manufacturing and financial services. Ontario has been hit particularly hard. According to a recent Statistics Canada survey, 35,000 Ontario jobs were lost in February, chiefly in construction and finance. The unemployment rate rose 0.7 percent to 8.7%, the highest level in 12 years. Ontario’s unemployment rate has risen by 2% since October. In fact, just over half of Canada’s 160,000 job losses have occurred in Ontario, well beyond the province's 39% share of the total workforce. These numbers are startling.

Not all provinces are suffering. For example, while Ontario is shedding jobs, Premier Brad Wall of Saskatchewan recently sent a delegation to Toronto to promote career opportunities in Saskatchewan and a new provincial refundable tax credit of up to $20,000 for post-secondary graduates who choose to stay there.

This raises a difficult question: in these tough economic times, should dismissed Ontario employees be required to relocate to job-rich areas in order to mitigate their damages?

In a 2005 case involving a terminated employee in B.C.’s hard hit pulp and paper industry, the B.C. Supreme Court said “the plaintiff has a duty to act reasonably and to take such steps as a reasonable person in the plaintiff’s position would take in his own interest to maintain his income and his position in his industry, trade or profession. The duty involves a constant and assiduous application for alternative employment, an exploration of what is available through all means”.

Courts have concluded that an employee is required to relocate to find new employment where doing so is reasonable. The courts look at a number of factors when determining the reasonableness of relocation.

If an employee has a history of frequently relocating across the country, failing to relocate could be considered unreasonable, especially if other opportunities were readily available elsewhere. In a case out of Newfoundland called Harris v. Eastern Provincial Airways (1963) Limited, the court said that a young man who was used to travel, and who had been employed outside the province previously, had no reason for not seeking employment elsewhere in Canada.

Several cases have also found that an employee will have a duty to relocate where this is customary in the industry.

Courts are, however, very hesitant to require workers with families to relocate. For example, in an Ontario case called Schalkwyk v. Hyundai Auto Canada Inc., the court found that it was unreasonable for an employee with a wife and two kids to relocate across the country or to the U.S. in order to mitigate his damages, as this was too disruptive and costly to the employee’s family.

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