By Stephen Dugandzic
In Giduturi v LG Electronics Canada Inc, 2023 ONSC 5476, the Ontario Superior Court addressed the wrongful dismissal of a long-serving warehouse employee and clarified the application of the duty to mitigate in the context of business outsourcing.
Factual Background
Mr. Giduturi, a 49-year-old warehouse worker, had been employed by LG Electronics Canada Inc. (“LG”) for over 13 years. In early 2021, LG announced plans to outsource its warehouse operations to Pantos, a third-party logistics company. LG assured employees that Pantos would offer them employment on equivalent terms, recognizing their seniority.
On January 11, 2021, Pantos extended a job offer to Mr. Giduturi for a warehouse team lead position. The offer included an “at-will” employment clause, which is unenforceable under Ontario law, and provided less favorable benefits compared to his existing LG package. Despite subsequent revisions to the offer—removing the “at-will” clause and adjusting compensation—Mr. Giduturi declined the offer on February 10, citing concerns about job security and the inferior benefits.
After Mr. Giduturi declined the offer, Pantos hired a replacement. LG officially terminated his employment on March 12, 2021, providing severance pay. Mr. Giduturi was unable to secure comparable employment until May 2022, when he accepted a six-month contract position without benefits.
Legal Issues and Principles
The central legal issue was whether Mr. Giduturi failed to mitigate his damages by declining Pantos’s job offer.
The court held that Mr. Giduturi did not fail to mitigate his damages for two primary reasons:
1. Timing of the Job Offer: The duty to mitigate arises only after termination. Since Pantos’s offer was made and declined before LG terminated Mr. Giduturi’s employment, the duty to mitigate had not yet been triggered. This aligns with the precedent set in Dussault v Imperial Oil Limited, where the court emphasized that offers made prior to termination do not engage the duty to mitigate.
2. Non-Comparable Employment: The Pantos offer was not comparable to Mr. Giduturi’s position at LG. The initial inclusion of an “at-will” clause and less favorable benefits rendered the offer inferior. Even after revisions, Mr. Giduturi had legitimate concerns about job security and the overall terms of employment.
The court also recognized Mr. Giduturi’s efforts to find new employment post-termination, noting that his job search was hindered by the COVID-19 pandemic and the limited value of his foreign education in the Canadian job market. Given these factors, the court awarded him 12 months’ reasonable notice.
Costs Award
In addition to damages, the court addressed the issue of legal costs. Mr. Giduturi had made three settlement offers under Rule 49 of the Ontario Rules of Civil Procedure, all of which LG rejected. The court awarded him substantial indemnity costs totaling $54,687, reflecting the unnecessary prolongation of litigation due to LG’s refusal to settle.
Key Takeaways
• Duty to Mitigate: An employee’s duty to mitigate damages arises only after termination. Offers of employment made and declined before termination do not engage this duty.
• Comparable Employment: For a job offer to be considered in mitigation, it must be comparable in terms of compensation, benefits, and job security.
• Costs Consequences: Employers who unreasonably reject settlement offers may face substantial cost awards if the court’s judgment exceeds those offers.
This case underscores the importance of timing and the comparability of employment offers in assessing an employee’s duty to mitigate, as well as the potential cost implications of rejecting reasonable settlement proposals.
*Always seek legal advice. The above is for information purposes only.
Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018.