Employees have a duty to take reasonable steps to mitigate his or her damages in the event of a wrongful dismissal
The Duty to Mitigate
In the event of a wrongful dismissal, employees have an obligation to take reasonable steps to mitigate their damages. The dismissed employee must take steps to find comparable, alternative employment. A dismissed employee will be unable to recover damages for any loss which could reasonably have been avoided. The employee’s responsibility to mitigate applies only during the period of reasonable notice, and their choices following the expiration of the reasonable notice period do not impact the potential award for damages.
Fixed-Term Employment Agreement
This duty exists even though they are the innocent party in the equation. Any benefit gained from complying with this duty to mitigate will be deducted from the damages that the employer must pay. The employee only has a duty to take reasonable steps to mitigate damages. The standard for mitigation is “reasonableness”, not “perfection”. According to the Alberta Court of Appeal:
“All the plaintiff need do is to make what at the time is an objectively reasonable decision; he or she need not make the best possible decision. In particular, the courts will not usually expect one faced with a breach of contract to take steps which are risky or unsavoury. The onus of proof is on the defendant … so any gap in the evidence accrues to the plaintiff’s benefit.”
The duty to mitigate is not an obligation owed by the dismissed employee to their former employer. Rather, the duty is owed to themselves, meaning that the former employee is entitled to seek a position that matches their level of skill and expertise. They do not have to take a lower paying job, even if that would please their former employer by reducing the amount of damages owing. Dismissed employees also are not often expected to seek or accept employment of a very different kind than what they previously did. Older employees are much less likely to be expected to relocate or accept employment far from home in order to successfully mitigate. The onus is on the employer who claims the former employee has breached the duty to mitigate. The employer must show:
- failure to mitigate on the employee’s part; and
- that the employee would have likely found another comparable position if one had been searched for.
Note that where an employee has become disabled during the reasonable notice period, they are still entitled to damages despite not being able to work (and therefore being unable to mitigate damages).
The employer must prove that the employee found or could have found similar employment reasonably suited to his or her abilities. It is a question of fact whether the employee acted reasonably, and each case is different. See Red Deer College v. Michaels (1975), 57 D.L.R. (3d) 386 (S.C.C.) and Tsakiris v. Deloitte & Touche LLP (2013), 8 C.C.E.L. (4th) 210 (Ont. S.C.J.) for more reading on this concept. For example, the courts have held that the number of resumes an individual sends out is not determinative of satisfying the duty to mitigate. It may be unfair or humiliating to require an individual to endure more rejection when the chances of finding a new job are low.
Personal factors, such as job location and family attachments, may be relevant in determining whether it is reasonable to limit the geographic range of a search for alternate employment. An employee is not required to conduct a fruitless job search, such as where the individual knows there are no realistic prospects based on their age and industry, or if an employee is ill. Courts have also been understanding of the emotional shock that some individuals feel when they are terminated, and they may find a delay of two to three months reasonable before an individual starts looking for work, though there should be evidence of the emotional impact from the termination.
An employee in a fixed term contract may be terminated without cause before the contract term has expired. It is possible that a fixed-term employment agreement contains an enforceable termination clause, and that this termination clause would limit the employee’s reasonable notice. However, in the absence of an enforceable termination clause, the courts have ruled that the termination date is the end of the contract and therefore the employee should receive all salary owing under the fixed term contract. In such a case, the employee may not have a duty to mitigate their losses.
FIXED TERM CONTRACT
Contractual Exception to Mitigation Duty
The general principle that a wrongfully dismissed employee must mitigate their losses can be displaced by the terms of their contract of employment. For instance, a contractual provision providing that an employer will provide a certain specified amount of notice or payment in lieu of notice will displace the obligation to mitigate. Again, an employee working pursuant to a fixed-term contract without an enforceable termination provision limiting notice upon termination may be entitled to the balance of the contract without owing a duty to mitigate.
If you have recently been terminated and have questions pertaining to your duty to mitigate or mitigation responsibilities, contact top Toronto employment lawyer and mitigation lawyer Stacey Ball for a consultation. Please note that the above information does not constitute legal advice. It is general information about the law. If you require legal advice with an employment issue, please contact the experts at Ball Professional Corporation.
Canadian Employment Law
Mr. Ball is author of the authoritative and definitive text Canadian Employment Law - published by Canada Law Book (a division of Thomson Reuters). The text is used and cited by lawyers, law schools and judges across Canada.
To order Mr. Ball's Canadian Employment Law please visit the Carswell Store by clicking here or on the button below.