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Features
The Duty to Mitigate: What’s It All About?
YOUR EX-EMPLOYEES HAVE RESPONSIBILITIES TOO

Reasonable notice and the Duty to Mitigate

When an employer dismisses an employee without just cause, the employer is required to provide the employee with reasonable working notice of the dismissal or pay in lieu of working notice. The amount of notice depends on a number of factors including the employee’s age, position, years of service, income and prospects of finding new employment.

Malcolm MacKillop
LL.B.
Senior Partner,
Shields O’Donnell
MacKillop LLP
However, the amount of notice an employer owes a dismissed employee is only half the story. In most cases, the dismissed employee has an obligation to try to find an alternative source of employment income. This is known as the “duty to mitigate.” If an employee finds a new job during the notice period, this can substantially reduce or even eliminate the employer’s liability to the employee. In other words, when an employee satisfies the duty to mitigate, employers save money. This makes it important for managers and HR professionals to understand the duty to mitigate.

What the Duty to Mitigate requires

When an employee is dismissed and is provided with working notice, the duty to mitigate requires the employee to continue to work up to his or her actual last day of employment. For example, in Giza v. Sechelt School Bus Services Ltd., (2012) 315 B.C.A.C. 116 (C.A.) (“Giza”), the employee was a bus driver. The employer told the employee that he would have a job for only 5 more weeks. The employee decided to quit immediately. The court found that the employer should have provided the employee with 6 months’ working notice instead of only 5 weeks, but also held that that the employee did not meet his duty to mitigate by failing to work during the
5 week notice period. The
court therefore reduced the employee’s damages by about 20 percent.

Hendrik
Nieuwland
LL.B.
Partner,
Shields O’Donnell
MacKillop LLP
In most cases when an employee is dismissed without cause, the employer chooses to provide pay in lieu of working notice, usually in the form of salary continuance. The dismissed employee’s duty in this case is to make reasonable efforts to find comparable employment. In litigation it is typically easy for an employee to prove they have made reasonable efforts to find a new
job, even when those efforts are arguably less than stellar. This is because the courts put the burden of proof on the employer to show there were comparable jobs available that the employee did not pursue. This is usually difficult to prove. One thing employers can do is assist the employee’s mitigation efforts by offering outplacement services. If the employee uses these services, it can improve the chance of finding a new job, which as noted above can reduce or eliminate any further liability to the employee. And if the employee refuses to use the services, the court has held that this is a failure to mitigate, which again can reduce or eliminate liability to the employee (see Giovanatti v. Plummer Memorial Public Hospital, [1997] CarswellOnt 4987 (Gen. Div.)).

Sometimes an employer will dismiss an employee, but then offer the employee a different job. In Evans v. Teamsters Local 31, [2008] 1 S.C.R. 661 (S.C.C.), the Supreme Court of Canada held that the duty to mitigate requires an employee to take a different job with the same employer where the employee will not have to work in an atmosphere of hostility, embarrassment or humiliation.

A good example of this is Ghanny v. 498326 Ontario Ltd., [2012] O.J. No. 2698 (Sup. Ct.) (“Ghanny”). In that case, the employee worked at a car dealership when the employer told him that his position would be eliminated. The employer offered the employee the same position at the same pay at a car dealership a few blocks away from his former work location. The employee refused to accept the employer’s offer and sued for wrongful dismissal. The court found that it was unreasonable for the employee to refuse the employer’s offer. The offer was for essentially the same job and there was no evidence that the new working conditions would be demeaning or that the relationships at the new location would be acrimonious. The court therefore dismissed the employee’s claim for damages.

As the Supreme Court of Canada said in Evans, an employee will not be required to take a different job with an employer where the employee will have to work in an atmosphere of embarrassment, hostility or humiliation.
For example, in Chandran v. National Bank of Canada, [2012] O.J. No. 1318 (C.A.), the employer sent a disciplinary letter to the employee that outlined complaints of bullying and harassment made against the employee by his subordinates. The letter informed the employee that he would be relieved of his supervisory duties and provided him with 2 possible reassignment options at the same grade and salary level but without supervisory responsibilities. However, the letter ended by stating that the employee would be immediately fired if he ever mistreated a co-worker in the future. The court held that the employee was not required to accept the reassignment positions offered by the employer. This was because the disciplinary letter caused the employee to be subjected to an atmosphere of embarrassment and humiliation as well as fragility in his continuing employment with the employer. The court therefore awarded the employee 14 months’ salary as damages.

When the Duty to Mitigate does not apply

The Ontario Court of Appeal recently clarified the circumstances when a dismissed employee has no duty to mitigate. In Bowes v. Goss Power Products Ltd., [2012] O.J. No. 2811 (C.A.) (“Bowes”), the employee’s contract provided that he would receive 6 months’ pay in lieu of notice if he was terminated without cause. The contract was silent with respect to the employee’s duty to mitigate. The employee was terminated but found a new equivalent job almost immediately. He still sued the employer claiming he was still entitled to 6 months’ pay in lieu of notice under his contract. The employer argued that the employee had fully mitigated his damages by finding a new job. The court held that the employee did not have a duty to mitigate, because in specifying a fixed notice period without mentioning mitigation, the parties were understood to have contracted out of the common law requirement to comply with the duty to mitigate.

The Bowes decision is very important for employers. Many senior level employees have contracts that specify the amount of pay in lieu of notice they will receive upon termination without cause. Without specific mention of the duty to mitigate in the contract, an employee will not be required to mitigate, and an employer will be required to pay the employee the full amount of pay in lieu of notice specified in the contract, even if the dismissed employee finds another job.

Malcolm MacKillop
and Hendrik Nieuwland practise employment law with the firm Shields O’Donnell MacKillop LLP of Toronto.



Mergers and Acquisitions: The Due Diligence Process
HOW HR PLAYS A MAJOR ROLE

Human Resources play a key role in mergers and acquisitions. That role begins long before the actual completion of the deal to merge with or acquire new companies or assets. According to Philip Gennis, commercial insolvency and restructuring specialist with msi Spergel inc, people issues are one of the most important factors that need to be considered and evaluated before any M&A agreement is signed by the parties.

Philip H. Gennis
LL.B., CIRP
Trustee,
msi Spergel Inc
Philip Gennis notes that “the values, risks and liabilities associated with the people side of the business are often overlooked and this can lead to a myriad of costly implications later on.”

He uses the example of pension liabilities which can be as much as 200% of the value of the company. In the insurance sector for example, pension liabilities can range up to 50% of the value of the company. Gennis feels that “discovering these liabilities after the sale is a little like buying a $400,000 house and finding out that you have to spend half that amount again to fix the foundation.” Due diligence is about discovering those discrepancies and dealing with them before any deal is finalized.

The due diligence process, especially for HR, is a thorough and complex analysis of the people issues of all parties in any proposed M&A activity that will ensure that all HR aspects of the organizations are open and transparent and that all benefits and liabilities are evident before a final decision is made. The HR due diligence process systematically examines a comprehensive set of issues that can have an impact on the profit margins, balance sheet, revenue and organizational effectiveness of the soon to be created organization.

Areas that need to be covered by a HR Due Diligence process include:

Employment Contracts and Collective Agreements

This involves reviewing all labour contracts and collective agreements with unions or employee associations including any consents, waivers or amendments. It also means looking closely at all management employment contracts and separate arrangements for severance pay, non-compete agreements and any special retirement provisions for management employees.

Organizational and Management Structure

This should include a complete review of any organization chart and an exercise that matches employees to the chart, especially at the management levels. Each senior manager should be identified along with their direct reports and the number of people in each division. Every executive of the company and all employees whose annual compensation
is over $100,000 should also
be identified.

Employee Benefit Plans

Copies of all employee benefit and pension plans should be obtained and reviewed thoroughly. This should also include any trusts, insurance policies, annuity contracts or other funding vehicles. The latest financial statement and reports of any non-funded liabilities also need to be considered. Review all special provisions that have been made for senior managers and prepare a list of any employees on short or long term disability leave from the organization. Any actuarial reports completed during the last three years with respect to these plans also need to be examined.

Termination Payments

All official and unofficial termination and severance pay provisions for departing employees should be reviewed with special interest paid to any pre-existing arrangements for executives and senior managers. This should include all severance provisions, bonuses, employee options and employee equity participation plans or agreements.

Employee and Retiree Lists

The latest list of all current and retired employees who are receiving any form of pension or benefit from the company should be reviewed. A detailed report should also be prepared for any future benefits or payments that these current or retired employees may be entitled to.

Outstanding Complaints or Grievances

The HR Due Diligence should also identify all existing formal employee complaints, grievances and existing or possible court cases arising from unresolved employee concerns that may have a liability for the proposed new enterprise. These are costs that must be fully considered before any M+A activities are brought to a conclusion.

If the organization does a good job with the HR Due Diligence process, the leadership of the organization can at least have the full picture on all people issues before they make a final decision. According to Philip Gennis, this exercise will hopefully find the “skeletons in the closet” and avoid nasty surprises later. He states that “The HR Due Diligence process is a crucial element in assessing the possible success of any merger or acquisition. People issues have a major impact on the profit margins, balance sheet and revenue of the future organization, and ultimately the success or failure of the whole process.”

Members Quarterly Staff Writer



Recruiting in the Mining Industry: New Challenges for Employers
IT’S NOT ONLY PAY THAT COUNTS

Mention the word mining and you’re bound to solicit a viewpoint that may or may not be in support of an industry that is entrenched in Canadian history. It is however one which continues to provide economic stimulus to virtually every region of the country.

Doug Ivey
RPR
Partner,
Human Resource
Mining
The mining industry employs 308,000 workers or 1 in every 55 Canadian jobs. According to the Mining Association of Canada, the average weekly pay for a mining worker in 2010 was $1632, which surpassed earnings of workers in forestry, manufacturing, finance and construction by 72%, 70%, 56% and 53% respectively. The industry needs 10,000 new workers each year over the next decade to replace current positions and fill new ones. So despite good wages and anticipated vacancies in the upcoming decade, HR professionals, labour and CEO’s alike have their work cut out for them in finding workers.

Simply stated but not simply solved, the challenges are: juggling an aging workforce, adapting to the need for a more skilled worker, marketing an industry that’s outside the urban setting and ridding the industry of an old mining culture that in some cases still exists.

What do current and future workers need to do? Mining is not a pick and shovel industry by any stretch. The industry relies on advanced technology to make it competitive in today’s marketplace. Hence companies today are not in the market for unskilled laborers. Professional and technological savvy people are needed. That means current and future workers need
to think seriously about postsecondary pursuits in engineering, geology, processing, environmental studies, trades, IT, equipment operations and the like. Coupled with that, the industry is for the most part situated in smaller communities or remote locations. This isn’t everyone’s cup of tea and my experience has been that a lot of job seekers are just not willing to permanently relocate, even for a good opportunity. I see it as an opportunity to expand one’s horizons and to experience something different.

I sometimes hear the country’s unemployment rate being mentioned in the same sentence as mining jobs. It shouldn’t be. Not everyone is interested in a mining job, is skilled enough even for entry level, is able and willing to relocate and/or is suited to the industry but for those that are, the opportunities are definitely there.

What do levels of government and educators need to do? Mining needs to be viewed and supported as a viable career choice. While we’re seeing some forward movement in this regard, the will to push ahead with new strategies in dealing with a greater exposure to the industry needs to continue. Pre-apprenticeship training in schools is becoming more prevalent. One high school I’m familiar with has such a program established. It offers students starting in Grade 10 the opportunity to gain exposure to pre-trades work in industry. That program continues to be an excellent opportunity for young people. In short, it gives the student one more option to draw from when it comes to a career path. More and more post-secondary institutions are offering opportunities for industry specific courses and programs. This is a win-win for both students and the economy.

What does industry need to do? Today’s job seekers are not simply looking for a big pay cheque. In no particular order, work/life balance, reasonable benefits, advancement and training opportunities, respect, inclusion, safe practices and sound environmental stewardship are but a few of the deciding factors for job seekers today. If the organization can’t deliver on those, it’s unlikely they will end up with a qualified, satisfied and productive workforce for years to come.

Recruitment is one factor but retention is another. It’s tough enough getting someone in the door. When they leave a year later because the organization doesn’t meet their expectations, there’s only one place to look and that’s within. Organizations today should seriously consider or practice job sharing, modified work schedules, succession planning, in-house learning and development, mentoring, housing and relocation options, outside-the-box benefits and allowances (e.g. how many mining companies provide daycare). They need strategies to source more females, aboriginals and minorities. If they don’t, it really doesn’t matter how strong the economy is or how many tons of product are in its’ mine reserves, there won’t be a productive workforce to mine it because they will all be working for a competitor who does promote those employee opportunities.

The competition for good workers is fierce so HR professionals had best be on top of their game.

To close, no article about mining should be written without acknowledging the work by industry, Government and Labour into the ongoing development of improved health and safety standards. Nothing is as important as everyone going home safe at the end of the shift.

Doug Ivey is a Certified Human Resources Professional and Registered Professional Recruiter. He is a Partner in Human Resource Mining (HRM), a consulting firm providing human resource solutions to the mining industry worldwide.

All Aboard Now – Get Everyone on the Same Track
ALIGN PERSONAL AND ORGANIZATIONAL VALUES

Personal values matter. They empower us by giving us a means to evaluate options and make decisions about which actions we should take to reach our goals. When our actions and values are aligned, we send out powerful signals to others about who we are and about our character. Values can also be a tremendous source of personal power and strength for us in times of challenge and change.

Trevor Hubert
MSc, CHRP
Organizational values matter. They can serve to clarify workplace expectations and guide organizational strategy and decision-making. When our employees’ actions are aligned to organizational values, we send out powerful signals to others about our workplace culture and our brand. Organizational values can also be a tremendous source of organizational power and strength, inspiring the rallying cries of employees during times of challenge and change.

Values clarification and alignment matter. Research on values congruence tells us that when an organization helps its employees clarify their personal values and clearly defines its own values, employee commitment and satisfaction rise by as much as 19% over other organizations without this clarity and alignment. Studies cited in the book “The Leadership Challenge” show that workplaces with high levels of shared values experience higher levels of employee loyalty, lower levels of employee stress, improved teamwork and higher levels of employee pride.

Having a strong culture
built on a set of shared and aligned values also impacts the bottom line. According to James Heskett, author of the book “Corporate Culture and Performance”, organizations with a strong culture built upon shared values experience 750% higher profit performance and revenue growth more than four times faster than organizations lacking a culture of strongly held shared values.

If you believe your organization could benefit from a values clarification and alignment initiative, there are a few tips to keep in mind. These tips are based on my experiences leading a 2-year values clarification and alignment initiative at Investors Group.

1: Begin with employees

Research published in the Journal of Business Ethics indicates that organizations that focus on clarifying and aligning organizational values without first helping their employees clarify and align personal values actually experience lower levels of commitment and engagement than those who do nothing at all. Make sure to begin your initiative by offering resources and exercises for your people to identify their personal values and describe how their daily actions align with these values.

2: Consult for consensus

Most organizations have identified value words within their vision statement. However, many do not invest the effort required to gain consensus around what behavioural commitments lie behind these shared value words. A critical part of any values clarification and alignment initiative must include a thorough consultation of senior leaders. The aim is to build a consensus understanding what commitments best reflect each shared value in the workplace. Sit down with each of your senior leaders and engage them in conversations about how they want employees to ‘live’ each value. Once you have had these conversations, look across all of your notes for those behaviour and action ‘themes’ that repeat across all senior leader consultations. These recurring ‘themes’ are the essence of your behavioural value commitments. Use these commitments to clarify your organizational value words.

3: Align performance systems

Make sure to include assessment items within your performance feedback and review systems that link into the organizational values and commitments you identified. If you already have a performance feedback and review system in place, make sure that the performance measures and standards align with the values and behavioural commitment ‘themes’ you identified through your senior leader consults.

4: Support coaching conversations

One of the critical roles a leader plays in any values clarification and alignment initiative is that of a values coach. Train your leaders in how to have coaching conversations with new and existing employees that help them understand shared organizational values. Ensure that they see the connections and congruence between their personal values and those of the organization. Applying a coaching mindset and process to a values clarification and alignment conversation is important because it helps employees link organizational values and commitments to role-specific behaviours that make sense
to them. This conversation is also a chance for leaders to clarify role and performance expectations. It is a powerful conversation to include as part of an employee onboarding plan.

It’s time to begin your values clarification and alignment initiative. You can then experience firsthand the tremendous benefits that come from working in a culture that is built on a strongly held set of shared values.

Trevor Hubert is Director, Corporate Training and Development, Investors Group Inc., Winnipeg and can be reached at trevor.hubert@investorsgroup.com.

Inside Out Leadershift
GET EMPLOYEES TO TAKE OWNERSHIP

The world is changing. Demographics, technology, globalization, financial pressures and the knowledge economy are making work far more complex. Customer and employee expectations have increased. This environment is often overwhelming for managers promoted for technical expertise where success has been defined as ‘doing’ and management is about doing even more.

Gail Boone
Executive Coach
and Owner of
Hold Them Big
There is a new normal in the workplace and managers feel like they just can’t get ahead. They are experiencing a transition themselves and at the same time, they are expected to manage and lead others in it. Often caught on a treadmill, managers are feeling the pace and the pressure from others and themselves. How are they supposed to handle all this?

To transition from doing to leading in the new normal requires an adjustment of the dial so to speak. It challenges us to change the conversation we have with ourselves as leaders and shift in the way we approach things. We cannot control the pace of change.

It is what it is. However, we
can influence how we approach our work. Our current reality pushes us to shift our thinking from being all caught up in the doing ourselves to paying attention to how we need to effectively lead people.

What’s different about getting the work done today? There’s simply too much for an individual leader to do it all. Many people burn out trying. What’s different about today is that the work is the people. Since organizational performance is achieved through people, how you enable the work of others has a direct impact on how employees enable the success of an organization. Because of the complexity and volume of work, the new normal is not about
the manager doing more, but the manager enabling capacity in others.

Carla Hurley
Executive Coach
and Owner of
Inside Out
Leadershift
How does all this impact your role? To lead others, one needs to lead self first. So what does this really mean? We are talking about having a HOT© coaching conversation with yourself.

Leadership for the new normal is about ‘doing differently’. You must learn to coach others to critically think and do rather than doing it all yourself. This involves being honest and open with ourselves as leaders and shift our thinking from doing everything that’s in front of us. Sometimes, it’s actually about deciding what not to do! You must move from trying to be all things to all people to creating capacity in others to do what needs to be done. It’s also about being transparent. This involves guiding and coaching people to find their own answers instead of doing all the thinking for them. Changing from ‘doing’ to ‘enabling’ might be perceived by employees who want immediate answers as a bit of a cop out. To top it off, senior managers still want the work done too. Coaching others to critically think and find the answers themselves will take more time at first until everyone gets used to it. It will also have lasting exponential impact on the organization’s capacity to deliver performance through people. You must create a coaching culture to leverage natural talent, build new capabilities and to generate individual accountability for performance in the long term. This frees you up to do the right work instead of everything that is in front of you.

As a manager, a transition needs to happen to get you off the treadmill you must recognize that the manager’s role is now different. It begins with YOU. It’s not about doing more, it’s about doing differently. What is the personal shift that needs to happen to enable honouring your subject matter expertise and building your own capacity to move from executing the technical to leading people? Building capacity in others and enabling them to do the work to have greater impact is first an ‘inside out’ job. It’s about developing new leadership capabilities in people development, leading through change and managing in ambiguity, balancing completion of short term priorities with building sustainable capacity. This will naturally take some time.

However, by transitioning from ‘doing to enabling’, leaders can have exponential impact beyond what an individual manager can accomplish. As a leader, building capacity and resiliency in yourself and in others becomes the focus. Instead of running nowhere fast on the treadmill, you and your employees will have the endurance needed for the marathon of the new world of work.

In our next article “Hold Them Big”, we will continue this conversation. We’ll expand to how we show up in relationships and offer strategies to enable capacity in others. The intention is to restore “Energy on the Front Line” and to positively impact those we serve.

Carla Hurley is an Executive Coach and Owner of Inside Out Leadershift and a Professional Certified Coach (PCC) with the International Coach Federation. She can be reached at carlahurley@eastlink.ca

Gail Boone is an Executive Coach and Owner of Hold Them Big and a Professional Certified Coach (PCC) with the International Coach Federation. She can be reached at gailboone@ns.sympatico.ca



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