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Expert medical evidence not required: Mitigation and aggravated damages

When an employee is terminated and claims wrongful dismissal, that employee has an obligation to mitigate their damages by making reasonable efforts to secure new comparable employment. However, where the employee has a medical condition that incapacitates or interferes with their ability to look for or perform work in their occupation, a Court is very unlikely to find that the employee has failed to make “reasonable efforts” to mitigate.

The Ontario Court of Appeal (“ONCA”) has recently confirmed in Krmpotic v Thunder Bay Electronics Limited, 2024 ONCA 332 (“Krmpotic”), that an employee does not need to provide expert medical evidence or documentation to establish such medical limitations to their ability to mitigate.

Further, Krmpotic has also upheld that such expert medical evidence or documentation is not required for aggravated damages.

Background

The employee in Krmpotic worked as a building maintenance supervisor for the company for almost 30 years. He was terminated in June 2016 shortly after returning to work from a medical leave where he was recovering from back surgery.

The employee began a wrongful dismissal claim, including a claim for aggravated/moral damages.

Following his termination, the employee attempted to work at his son’s residential renovation company. However, due to his medical condition, he was not able to meet the physical demands of the job.

The trial judge determined the employee was entitled to a reasonable notice period of 24 months.

The trial judge rejected the company’s argument that the employee had failed to make reasonable efforts to mitigate his damages, noting the employee’s ability to perform the work of his occupation had been significantly limited by his age and recovery from back surgery. In making this determination, the trial judge relied on the affidavit evidence of the employee, his wife, and his son.

The trial judge awarded $50,000 as aggravated damages for the manner in which the employee was dismissed. However, the trial judge dismissed the employee’s claim for mental distress damages. The trial judge stated that without further and better evidence, the evidence provided by the employee, and his wife and son, (which was relied upon to determine there was no failure to mitigate) was insufficient to conclude the employee’s mental distress was a result of the termination.

The ONCA’s decision

The Company appealed the trial judge’s decision, asserting that the trial judge had erred in determining there was no failure to mitigate due to physical incapacity. One of the company’s primary arguments was regarding the lack of expert medical evidence with respect to the employee’s physical limitations.

The ONCA did not accept the company’s arguments, stating there is no general principle that physical incapacity can only be established by expert medical evidence. As such, the trial judge did not err by making a determination based on the evidence before them (i.e., the evidence of the employee and his wife and son).

The company also argued the trial judge erred with respect to the aggravated damages by considering mental distress damages separately and by awarding aggravated damages after rejecting the employee’s claim for mental distress damages.

The ONCA also rejected this argument, noting that such an argument portrayed the employer’s duty of good faith during the termination process, and the meaning of mental distress in such a context, too narrowly. The ONCA noted that mental distress is a broad concept that can range from normal distress caused by dismissal to diagnosable psychological conditions.

The ONCA further noted that mental distress in the context of aggravated damages does not require a diagnosed psychological condition, just that there was bad faith conduct by the employer which resulted in the employee suffering harm beyond the normal distress and hurt feelings resulting from dismissal.

The ONCA confirmed that the trial judge did not err in this aspect.

Key takeaway(s) for employers 

Employers face a high bar to succeed in making a failure to mitigate argument. They must prove not only that the employee failed to take reasonable steps to mitigate, but that the employee would have been expected to secure comparable employment if reasonable efforts had been made. Further, this decision confirms that an employee is not even required to produce expert medical evidence or documents to successfully establish that they were unable to mitigate their damages due to medical reasons.

Similarly, this case holds that such medical evidence is not always required to establish an employee’s entitlement to aggravated damages.

Employers should take these considerations into account when assessing exposure and potential liability. Certainly, as part of their obligation of good faith, employers should be candid, reasonable, honest, and forthright with their employees and refrain from being unduly insensitive – including during the termination process.

John Hyde is the managing partner at Hyde HR Law in Toronto. He advises management on all aspects of employment and labour law, including representation before administrative tribunals, collective agreement negotiation, arbitrations, wrongful dismissal defence and human rights.