Employment Income Earned During The Reasonable Notice Period
The British Columbia Court of Appeal recently weighed in on the calculation of employment income earned by a plaintiff during the reasonable notice period in Pakozdi v. B & B Heavy Civil Construction Ltd., 2018 BCCA 23 (CanLII). In its decision the Court of Appeal addressed a situation where a terminated employee was not provided adequate reasonable notice on termination, but actually derived a greater income from a secondary consulting business that he operated during the course of his employment and into the notice period.
At the trial level, the court awarded the plaintiff five months’ notice for the defendant’s termination of his fixed term five year employment contract, plus an additional three months’ notice to compensate the plaintiff for his poor health which had apparently complicated his job search efforts. Additionally, the trial court held that income derived from the plaintiff’s supplementary consulting business was not to be subtracted in the calculation of his damages, although the plaintiff had, in fact, earned more than double the amount of income during the notice period from this supplementary consulting business than he had earned during his employment.
Supplementary Employment Income
On appeal, the Court of Appeal held that the trial judge had erred in both the calculation of the plaintiff’s reasonable notice and also in failing to consider the supplementary employment income in the damages calculation.
First, the Court held that the plaintiff’s notice of five months, while being on the high end of the spectrum was within acceptable parameters, however, the augmentation of the notice period by another three months for health considerations was unjustified as the plaintiff demonstrated a clear ability to work at his secondary business during the notice period. Second, the Court of Appeal held that the trail judge erred by failing to include employment income earned by the plaintiff during the notice period as a mitigation of his over-all damages. In this case, the plaintiff earned approximately $30,000.00 more from his consulting business during the five month notice period than he had earned prior to his termination and this amount should have been deducted from the amount payable to the plaintiff for reasonable notice.
Had the plaintiff earned a similar amount from his consulting business during the notice period that he had earned during his employment, this amount would not have been deducted from his notice period income.
This case demonstrates both what constitutes reasonable notice to a terminated employee, even a fixed term employee, but also shows the need for the terminated employee to take steps to mitigate their damages on termination, wherever possible.