Worker unable to mitigate termination damages due to physical incapacity: Ontario Court of Appeal

His employment ended abruptly after 30 years, soon after returning from medical leave

Worker unable to mitigate termination damages due to physical incapacity: Ontario Court of Appeal

In a recent ruling, the Ontario Court of Appeal found that a worker could not mitigate damages from termination due to his physical incapacity.

In Krmpotic v. Thunder Bay Electronics Limited, 2024 ONCA 332, the court addressed key issues of mitigation, aggravated damages, and joint and several liability in an employment law case involving Drago Krmpotic and his former employers, Thunder Bay Electronics Limited (TBEL) and Hill Street Financial Services (Hill Street).

Drago Krmpotic began his career as a carpenter in 1976 and became a journeyman in 1983. He joined TBEL and Hill Street in 1987 as a building maintenance supervisor, a role he held until his termination in 2016. His employment ended abruptly after nearly 30 years, shortly after he returned from medical leave following back surgery necessitated by workplace injuries. At the time of termination, Krmpotic, aged 59, was earning an annual salary of approximately $72,864.

The appellants offered Krmpotic a severance package of 16 months’ salary, which he refused, leading to his wrongful dismissal lawsuit. He also claimed damages for mental distress and aggravated/moral damages, capping his claim at $100,000, exclusive of post-termination payments by the appellants.

The trial court found Krmpotic to be a "loyal, responsible and trusted employee" who was significantly physically strained due to his job demands, including maintenance work on TBEL’s transmission towers. The court awarded him a 24-month reasonable notice period and dismissed the appellants’ argument that Krmpotic failed to mitigate his damages, considering his age, recent surgery, and physical limitations. Consequently, Krmpotic was awarded $48,576 for the remaining eight months of notice after accounting for the 16 months’ salary already paid.

The trial court also awarded Krmpotic $50,000 in aggravated damages, finding that the manner of his dismissal was neither candid nor forthright and thus breached the employer's duty of good faith. However, the claim for mental distress damages was dismissed due to a lack of medical evidence linking the distress directly to the manner of dismissal.

The appellants contended that the trial judge erred in finding Krmpotic unable to mitigate during the notice period, awarding aggravated damages, and holding both TBEL and Hill Street jointly and severally liable. The Court of Appeal upheld the trial court's decision, affirming that the trial judge correctly found Krmpotic unable to mitigate due to physical incapacity, supported by testimonial evidence and attempts at re-employment.

Furthermore, the court found that the award for aggravated damages was justified, reflecting the employer’s breach of good faith during the dismissal process. The court also ruled that both TBEL and Hill Street were jointly liable as they collectively employed Krmpotic throughout his tenure, a fact corroborated by their own documentation. Ultimately, the court dismissed the appeal was dismissed with costs awarded to Krmpotic, fixed at $12,000.

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