The duty to mitigate often comes as a surprise to many Ontario employees. This blog seeks to provide some basic answers with respect to the duty to mitigate as it is an important legal concept to understand and the failure to mitigate can have significant impacts on an employee’s claim for notice upon wrongful dismissal.

1. The duty to mitigate means that upon dismissal an employee must look for alternative employment.

Simply put, the duty to mitigate means that upon dismissal an employee has a common law legal duty to take reasonable steps to “mitigate” their damages. In the context of employment law, these reasonable steps to mitigate their damages mean that the employee should look for alternative employment upon dismissal.

However, the onus to prove that the employee has failed in their duty to mitigate rests with the employer. They must show two things to prove to Ontario courts that the employee failed in their duty to mitigate. The first is that the employee did not perform a reasonable job search. The second is that the employee had similar jobs available to them if they had just undertaken a reasonable job search.

Further, there are only limited circumstances that the employee may be able to argue that they are not subject to a legal duty to mitigate. The first instance could be if the employee has a fixed-term contract with the employer that is silent on the duty to mitigate. The second could be if the employee is totally disabled and, as such, the employee is not able to look for alternative employment.

Does this mean that the employee should accept any job offer that they get post-termination? NO. The employee must make only reasonable efforts to find alternative employment. Alternative employment that would be reasonable would be a job that is similar to the employee’s job with their former employer including in a similar industry, job description or title and pay.

If the employee had undertaken a reasonable job search and had been able to find alternative employment that was similar to their previous employment and that this alternative employment was obtained during the notice period, the employee would be considered to have mitigated their damages. Only in these circumstances would the employee’s common law notice period be reduced or damages owed by the employer lessened due to the duty to mitigate being fulfilled by the employee.

However, there is a way to partially mitigate. For instance, in situations where an employee has accepted a new job that may be similar in terms of responsibilities or title to their former employment, but the wages or pay is substantially less. In this situation, the employer may be successful in arguing that the employee should receive the difference between the two salaries in terms of what would constitute pay in lieu of notice. However, the converse is also true in that if the employee was reasonable in accepting the lesser paying role, the court may consider the income to be substantially inferior and not constitute “mitigation income” at all (see more below).

2. The employee’s entitlement to pay in lieu of notice upon dismissal may be reduced if they fail in their duty to mitigate.

First let us remind our readers that the duty to mitigate is fulfilled by an employee if reasonable steps are taken to look for alternative employment. As such, this does not mean that 1) the employee needs to apply to every job opportunity available nor 2) they can simply refrain from applying to jobs that are very suitable without any consequence.

The consequence of failing in the employee’s duty to mitigate is that the employee’s termination pay under the common law (pay in lieu of notice of termination) should be reduced to reflect this failure. To be clear, the employee is still entitled to compensation in terms of notice or pay in lieu of that notice under Ontario’s Employment Standards Act, 2000. Secondly, if the employee’s alternative employment is substantially inferior to what they had in their previous employment, the employer may not be able to get the benefit of the employee’s income as such income may not be regarded as “mitigation income” in the eyes of the law. This analysis is case-specific and should be applied using the context of each case.

3. In limited circumstances, an employee’s refusal to return to work for the same employer may be considered failure to mitigate.

Employers routinely demand that the employee show their efforts at mitigation and the employee should then show the proof of their job search efforts. For instance, the employee may show to the employer job lists of companies or businesses that they applied to, emails that they sent out with their resume, etc.

However, in limited circumstances, the employer may set out to the employee that their job or a very similar job in terms of responsibilities, prestige, pay, etc. is available with the former employer. Whether or not the employer should accept it to mitigate their damages is extremely fact-driven to the specific matter at hand. Any employee who is in that position should approach an employment lawyer for the lawyer to assist the employee so that the employee is in the best position to understand the risks of failing to accept any offer of employment from their former employer.

How Zeilikman Law can Help

Zeilikman Law can help both employers and employees determine what the boundaries of the duty to mitigate are in their specific case. For example, in cases of employers, we have helped employers determine how to approach the topic of mitigation with respect a recently dismissed employee. However, in cases with employees, we have helped employees determine how best to mitigate in terms of their own specific job and what legal issues they may encounter.

For more information about this topic, please visit our website and review our blog Fired or terminated from your job? Why lawyers say that you must look for work!

If you have specific questions about mitigation related to your own case, you should approach an employment lawyer and request a consultation. Zeilikman Law can be reached via telephone at (905) 417-2227 or online here in order for you to get your employment law questions answered relate to the topic of mitigation or other important employment law issues.