In employment law, the duty to mitigate is a cornerstone principle: when an employee is wrongfully dismissed, they must make reasonable efforts to find new work to reduce their damages. But what happens when a fixed-term contract is terminated before the job begins?
The British Columbia Court of Appeal dealt with this question in Mac’s Convenience Stores Inc. v. Basyal, 2025 BCCA 284 (Basyal) and reshaped how British Columbia views mitigation in the context of fixed-term employment. Specifically, the court clarified that fixed-term contract employees have a duty to mitigate if their contract is terminated early.
The decision, released on August 8, 2025, involved a class action brought by temporary foreign workers recruited to work at Mac’s Convenience Stores in Western Canada. Upon arrival in Canada, some of the workers found there was no job waiting for them. Despite never beginning a job they were contracted for, the court considered the issue of whether the workers had a duty to mitigate their losses by seeking alternative employment given their 24-month fixed-term contracts were terminated.
Crucially, the trial judge held that these workers did have a duty to mitigate their losses. This decision was upheld by the Court of Appeal. Importantly, the capacity for these employees to mitigate their losses given the nature of their work permits will be at issue in a subsequent trial on the full facts and issues of the case. Nonetheless, this decision clarifies that even in cases of early termination of a fixed-term contract:
- The duty to mitigate applies unless explicitly waived by contract.
- Employees must make reasonable efforts to find comparable employment, even if the promised job never materialized.
- The fact that a contract was for a fixed term does not exempt the employee from this obligation in British Columbia.
In its reasons, the court noted that the law in Canada has been unclear regarding whether a fixed-term employee has a duty to mitigate when the contract is silent as to payment of the remainder of the contract term on termination.
For example, a leading Ontario Court of Appeal decision Howard v. Benson Group Inc., 2016 ONCA 256 (Howard) previously found that there is an implied obligation on the employer to pay the employee the remainder of the fixed term upon early termination and therefore the employee has no duty to mitigate. In Howard, the court awarded full salary and benefits for the unexpired term of the fixed-term contract without requiring mitigation efforts.
However, in this case, the court affirmed the decision in Quach v. Mitrux Services Ltd., 2020 BCCA 25 (Quach) that in British Columbia, money earned by the employee for new employment or engagement during the fixed term ought to be deducted from the unpaid wages that would have been earned in the fixed-term contract. The Court of Appeal in Basyal agreed with Quach and clearly articulated at para 68, “absent a term to the contrary, an employee under a fixed term contract has a duty to mitigate.”
Therefore, it is important for employers hiring in different provinces, particularly in British Columbia and Ontario, to understand how the duty to mitigate in fixed-term contracts varies by jurisdiction. Additionally we expect at some point this issue may go up to the Supreme Court of Canada, so further evolutions of the law in this area are likely to occur.
Caution: Despite this positive decision for British Columbia employers, fixed-term contracts can create major liabilities for employers, particularly where employment continues beyond the term or where the contract does not allow for early termination. If you have any questions regarding employment contracts or employee dismissals, please contact a member of our Labour, Employment & Human Rights Group.