What is Mitigation?
When an employee is terminated without cause, they have a duty to make reasonable attempts to find comparable employment in order to mitigate their losses from the dismissal. There are various legal issues and scenarios that make the duty to mitigate less clear-cut than it seems.
How to Comply with the Duty to Mitigate:
As stated, a terminated employee has a duty to mitigate their losses. Choosing to stay unemployed can result in a situation where the employee has been deemed to have failed in their duty. This can ultimately lead to the notice pay provided to the employee being reduced. However, it should be noted that the employers have a heavy burden in proving a failure to mitigate has taken place. The Supreme Court of Canada has stated this burden is “by no means a light one”.
Employees should try to take reasonable steps to mitigate their losses. The following are several ways an employee can do this:
- Applying for available jobs
- Reaching out to contacts in your industry
- Cold calling companies
- Keeping a record of your efforts (dates, jobs applied to, contacts spoken to, if you received interviews, etc.)
It is important to note that going back to school rather than applying for jobs will not satisfy the duty to mitigate.
Is there an Obligation to Apply for Lower-Paying Work in Order to Mitigate?
This is a common question dismissed employees have. Do they have to accept any position they can find? Does it have to be in the same industry? More specifically, if one was previously a company Director, do they still need to accept a lesser position such as manager?
The Lake v. La Presse decisions provided us with the insight to answer such questions.
The dismissed employee was the General Manager of a division of the Employer, where she earned $185,000 per year plus benefits. Eight staff members reported to her, and she reported to the VP of Sales and Operations.
Decision of the Motion Judge
The original decision was that she was entitled to eight months’ notice. However, the motion judge felt that the employee failed to take reasonable steps to mitigate her losses. The judge stated:
- The employee waited too long to start her search;
- The employee did not apply to enough applications; and
- The employee “aimed too high” in her job search.
The motion judge stated that there was nothing wrong with her applying to roles such as VP. The motion judge inferred that had she expanded her search efforts (for example, a sales representative), she likely would have found a new job. As a result, the motion judge deducted two months from the eight-month award.
Court of Appeal Reversal
The Court of Appeal stated that the employee was not required to search for lesser-paying jobs. Crucially, the Court of Appeal stated that the employee needs only to seek comparable employment. This means that the status, hours, and compensation are comparable to what the employee previously had.
It also noted that the terminated employee has no obligation to search for lower-paying work such as a sales representative (as suggested by the motion judge).
Lastly, the Court of Appeal found that she did not aim too high in her search efforts because the positions were largely a fit based on qualifications and skills. The motion judge focused too much on the title itself.
Therefore, the Court of Appeal held that there was no failure to mitigate and thus, no deduction to her eight months’ notice.
Further Questions on the Duty to Mitigate?
Please contact our office by calling (416) 921-7997 ext. 225 to book an appointment with Stacey Ball.