What is mitigation?
If an employee is claiming wrongful dismissal or constructive dismissal, they must take all reasonable steps to secure comparable alternative employment to minimize the financial impact of their dismissal for themselves. This is referred to as mitigating damages.
What steps are required by an employee to mitigate their damages?
While there’s no perfect standard for assessing mitigation, there are things employees are expected to do to demonstrate that they have made reasonable efforts to secure comparable alternative employment.
Begin the job search right away. This is because damages are awarded based on how long the court believes it could take to find comparable employment, known as the notice period, not based on how long it actually takes. That means if an employee takes longer to find a job, they won’t necessarily be entitled to more in damages.
Search for similar employment. This means searching for something that aligns with their current level of experience, expertise and standing within the same or similar industry. They are not expected to take a position outside their industry or well below their qualifications.
Document all job search efforts. This may be used to prove mitigation in the legal process.
Sometimes an employee may be required to mitigate their damages by accepting a reduced position with their former employer. In these cases, the court determines whether a reasonable person would have found continued employment with the former employer impossible given the specifics of the case.
How does the employer prove a failure to mitigate?
The employer is responsible for proving a failure to mitigate by showing that the employee would have secured alternate employment had they taken reasonable steps in their job search.
What if the employee secures alternate employment within the notice period?
If an employee advancing a claim for wrongful dismissal finds alternate employment within the period of reasonable notice, earnings from this new employment will be deducted from the award of pay in lieu of notice.
For example, if the court determines that an employee is entitled to $25,000 in reasonable notice damages, any income the employee earned from their new job during that notice period will be deducted along with any court costs. The courts are not awarding reasonable notice damages to punish a former employer but rather are concerned with estimating, given all the relevant factors, how long it will likely take the employee to find a new job.
If a dismissed employee obtains a comparable new job, with a similar salary to their old one, immediately after being dismissed, it’s likely they won’t be entitled to any reasonable notice damages because they completely mitigated their loss. However, statutory pay under employment standards legislation may still be awarded.
Navigating the duty to mitigate can be difficult when an employee is faced with new job opportunities and uncertainty whether they are obligated to take a position or not. We can help navigate this with you in a way that leads to the best possible outcome.