B.C. decision marks beginning of broader reconsideration of fixed-term employment contract principles across Canada
A recent decision from the British Columbia Court of Appeal represents a major departure from a well-established legal principle in Ontario, one that has guided employers and employees alike for over a decade.
In Mac’s Convenience Stores Inc. v. Basyal, the BC Court of Appeal held that employees under fixed-term contracts have a duty to mitigate their damages, unless the contract explicitly says otherwise.
This directly contradicts the rule established by the Ontario Court of Appeal in Bowes v. Goss Power Products Ltd. and Howard v. Benson Group Inc. which held that no such duty exists in the context of fixed-term employment.
This surprising divergence in the common law creates uncertainty for national employers and may ultimately require resolution by the Supreme Court of Canada.
Since the decisions in Bowes in 2012 and Howard in 2016, Ontario courts have been clear: if an employee is dismissed early from a fixed-term contract and there is no enforceable termination clause, the employer must pay the employee the balance of the contract without any deduction for mitigation. In other words, the employee does not have to look for new work, and even if they do and earn income, that income does not reduce the employer’s liability.
The rationale behind this rule is that the parties chose to define the...
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