Drafting for Certainty: Clear Mitigation Clauses Protect Employers
In Mac’s Convenience Stores Inc. v Basyal, 2025 BCCA 284, the British Columbia Court of Appeal confirmed in British Columbia that employees of fixed-term contracts are required to mitigate if the contract is terminated early, unless the agreement expressly provides otherwise. Although the law is less clear in Alberta, it is most likely that this statement of the law is also accurate in this jurisdiction.
Facts
The decision arises from a class‑action lawsuit by migrant workers recruited under the federal Temporary Foreign Worker Program.
The Plaintiffs alleged that an immigration consultant retained by Mac’s to assist with recruitment breached its fiduciary duty to them. A subclass of Plaintiffs further alleged that, upon arriving in Canada under fixed-term contracts, the promised jobs either did not exist or did not align with the terms of their agreements. The lower court found that the workers had by implication no duty to mitigate and concluded that Mac’s could be vicariously liable for the consultant’s conduct.
The issues on appeal were the following:
- Whether the consultant was acting as Mac’s agent in the recruitment process, and, if so, if Mac’s as a non-fiduciary principal could be vicariously liable for the consultant’s breach of fiduciary duty, and
- Whether the employees who arrived in Canada to find there were no jobs had a duty to mitigate their losses by seeking other employment.
Findings
The B.C. Court of Appeal overturned the lower court’s decision, finding no basis for vicarious liability because the consultant lacked both actual and apparent authority to bind the employer.
The Court also reaffirmed the long-standing common-law principle that employees on fixed-term contracts must mitigate their losses unless the contract clearly states otherwise. It concluded that the judge had erred by overlooking express language in the agreements permitting employees to seek other employment or return home. The Court agreed that under the circumstances it would have been almost impossible for these employees to find other employment, but the Court thought it important nonetheless to distinguish between the duty to mitigate and the capacity for mitigation.
In Alberta, there has been conflicting decisions regarding the duty of an employee to mitigate when a fixed-term employment agreement is terminated. However, the prevailing weight of authority supports the position that an employee whose definite-term contract is breached must still mitigate his or her damages. Any sums earned within the balance of the contractual term must be deducted from the employer’s liability, subject to the contract’s terms. Where those terms indicate that earnings should not be deducted, no deduction will be required.
Implications for Employer
When drafting fixed-term employment contracts:
- Include an express clause either permitting early termination on notice or clarifying obligations on early termination; and
- Specify whether mitigation is excluded from the employees entitlement upon termination.
McLennan Ross can provide legal advice in respect of drafting and interpreting employment contracts for employers. Connect with our Labour and Employment team for assistance.