ONCA holds there is no duty to mitigate where fixed term contract specifies penalty for early termination

Howard v. Benson Group Inc.
2016 CarswellOnt 5382, 2016 ONCA 256, 264 A.C.W.S. (3d) 665
Ontario Court of Appeal

Employment --- Wrongful dismissal — Damages

Appellant, employed pursuant to five-year term employment contract (Employment Contract) terminated without cause after 23 months — Appellant commenced action for breach of contract, seeking compensation for unexpired portion of contract — Subsequent motion for summary judgment granted but motion judge awarded common law damages for wrongful dismissal — Employer's right to early termination without cause was governed by Clause 8.1 which motion judge found unenforceable due to ambiguity — That finding was not appealed — Motion judge held that remaining provisions of Employment Contract did not demonstrate intention by parties to displace common law presumption of reasonable notice (or pay in lieu) in event of termination without cause — He therefore rejected appellant's argument he was entitled to contractual damages for unexpired term — Appellant's appeal allowed — Motion judge erred in holding that Employment Contract, without Clause 8.1, failed to rebut common law presumption that every employment contract includes implied term that employer must provide reasonable notice to employee prior to termination of employment by clearly specifying some other period of notice — Employment agreement which states unambiguously that employment is for fixed term ousts implied term that reasonable notice must be given for termination without cause — If parties to fixed term employment contract do not specify pre-determined notice period, employee is entitled, on early termination, to wages employee would have received to end of term — Employment Contract was sufficiently clear to oust common law presumption of reasonable notice on termination — Appellant was entitled to compensation he would have earned to end of Employment Contract — There is no duty to mitigate where contract specifies penalty for early termination — It does not matter whether penalty is specified expressly or is by default the wages and benefits for unexpired term