It can be a difficult process for people when an employment relationship ends. There may have been a wrongful dismissal upon termination, which places certain obligations on the employer and employee

The employer is expected to follow both legislative and common law standards, including providing reasonable notice for termination or pay in lieu of notice if the employee was terminated without cause. Employees are also obligated to mitigate damages if they have been terminated. The employer must also show that the terminated employee would likely have found a comparable position within the reasonable notice period if they had properly mitigated their damages.

In this article, we will provide an overview of the duty to mitigate wrongful dismissal cases, including the obligations required of both employees and employers in showing that the duty to mitigate was satisfied or breached. 

We will also examine a recent Ontario Court of Appeal case, Lake v. La Presse Inc., 2022 ONCA 742,  in which the court overturned the lower court’s finding that the employee did not satisfy their duty to mitigate. In that case, the employer also did not provide evidence that the employee would have likely found a comparable position within the reasonable notice period if they had taken steps to mitigate damages. This case example will provide important takeaways for employees and employers involved in settlement negotiations or litigation concerning a wrongful dismissal

What is the duty to mitigate in a wrongful dismissal case?

When terminating an employee without cause, an employer must provide reasonable notice or pay in lieu of notice. However, the amount of compensation to be paid by the employer may be reduced if the employee fails to mitigate their damages. 

An employee, upon termination, has a duty to mitigate damages. This is based on the idea that the employee should not have to pay for losses that could have been reasonably avoided. The duty to mitigate is assessed based on evidence of the employee’s efforts to obtain a new position. 

What does an employee need to do to satisfy their duty to mitigate?

To show that an employee has fulfilled their duty to mitigate, there needs to be evidence that they applied for a new position reasonably soon after they were terminated. The employee may also want to show that they were gathering more information on potential roles. The court may also assess how frequently the employee applied for new positions and the types of positions for which the employee applied. The court’s finding will depend on the specific circumstances of the case, which can vary. 

Employer must show that the employee did not satisfy their duty to mitigate 

Even if the employee has breached their duty to mitigate, the employer must still show that the employee could have reasonably avoided some of the loss resulting from the termination. In other words, it is the employer’s responsibility to show that the employee could have found, by properly searching, similar employment that fit with their abilities. The employer must show that the employee unreasonably failed to secure new employment. The courts have emphasized that this is a heavy burden on an employer, as it already imposes an obligation on the employee to seek new employment when they suffer from the difficulties arising from a potentially wrongful termination

In summary, the employer must prove two elements:

  1. The employee failed to take reasonable steps to mitigate their damages; and
  2. If the employee had taken those steps, they could have obtained a comparable position reasonably suited to their abilities. 

Lower court finds that the employee failed to mitigate their damages

In the Lake case, the employee worked for the employer, La Presse Inc., for five years. She was then terminated without cause in 2019. Before this role, the employee worked in sales and media for approximately 20 years. She became general manager for La Presse, with a base salary of $185,000 and other benefits. 

The employer claimed that due to her extensive experience in sales and management, she could find similar positions in the market. The employer argued that her skills were highly transferable, so the notice period should be reduced. 

The employee claimed she was still unemployed after two years, despite her efforts in applying for new work, receiving help from a career counsellor, networking, and attending conferences. 

The employer also claimed that the employee was unsuccessful in her search because she was searching for vice-presidential roles, even though she had yet to work as a vice president. The employer claimed she could have found similar employment if she had applied for positions within her skill set and media industry experience. 

At the lower court level, the court found that the employee failed to mitigate her damages, as she could have found a position if she had broadened her expectations and applied for roles in the media industry, where she had the most experience. The motion judge found that more jobs were available for her than those to which she applied, as she was mainly applying for vice-president roles, which would have been a promotion for her. The court also found that she failed to mitigate her damages, as she did not search for a new position for a month after her termination, even though she was informed of such a few months before her final day at the end of April. She also applied for a position four months after she was terminated. 

The employee appealed.

Court finds employer did not prove that the employee could have secured similar employment

The Court of Appeal found that the lower court judge erred in finding that the employee was to accept a new position with lower remuneration to mitigate. 

The Court of Appeal also found that the employee took substantial steps in mitigating her damages. For instance, she documented her daily search for jobs on LinkedIn and other job boards. The court found that her search keywords were within the range of comparable job titles, and she did not limit herself to only searching for vice-president roles. The court also found that she made significant efforts in networking and using career transitioning services that the employer-provided in addition to a private career coach. 

There was also no evidence that the employee would have found comparable employment if she had reasonably made steps to do so. Therefore, the court could not conclude that the employer had demonstrated the employee failed to mitigate damages, which would have contributed to the loss claimed by the employee. 

Contact Haynes Law Firm in Toronto for Advice on Termination and Wrongful Dismissal Claims

In a wrongful dismissal case, employees have a duty to mitigate damages. However, employers are responsible for demonstrating that the employee contributed to the loss by failing to search and obtain comparable employment properly. Our experienced employment law legal team at Haynes Law Firm in Toronto can assist you with issues that arise from termination. For employees, our goal is to ensure that they understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities arising from terminations not permitted by the legislation. We are dedicated to finding the best resolution for you.

To book a consultation, please contact us online or by phone at 416-593-2731.