After an employee is terminated, they may want to pursue a wrongful dismissal claim if they did not receive the expected compensation. For instance, employers must provide terminated employees with reasonable notice or pay in lieu of notice. If the termination occurs right away, then the employer may need to pay for the amount of the reasonable notice period, which can vary at common law, depending on the employee’s length of tenure, their type of role, their age, etc. However, this amount may be reduced if the employee fails to mitigate damages, meaning that they did not make adequate efforts to secure another job and their financial situation has worsened after termination. Employers are not responsible for the damages involved when an employee has failed to mitigate.

This can be a different matter for terminated employees with medical conditions. Their health condition can be considered if it is relevant to their duty to mitigate damages in the wrongful dismissal. In this post, we will discuss an employee’s duty to mitigate and how this applies when the employee faces medical conditions after termination that impact their ability to find a new job. This post will provide important takeaways for employees seeking to understand their duty to mitigate and for employers to understand how it applies to a wrongful dismissal case.

What is the duty to mitigate a wrongful dismissal?

In a wrongful dismissal, employers must give the employee reasonable notice or pay in lieu of notice. In exceptional circumstances, the reasonable notice period can run from a few weeks to two years or more. The reasonable notice period at common law varies depending on the employee’s age, role with their employer, how long they worked with the employer, and more. The notice period can also be modified based on the agreement in the employment contract. 

The notice period can also be shortened if the employee fails in their duty to mitigate damages. After a termination, an employee is expected to make reasonable efforts to secure a new job. An employer is not responsible for additional damages arising from the employee’s lack of effort in searching for a new role during the reasonable notice period. The employee is required to find and accept new employment that is a comparable role. 

There must be evidence that the employee applied for a new position soon after termination. Some evidence of the employees’ efforts can be gathered by gathering additional information on new roles. The court will also consider the frequency of the employees’ applications and the types of roles that they were applying for. For example, if they were applying for roles that were not suited for them based on their work history and could not secure a role, then the court may not find that the employee made reasonable efforts in their duty to mitigate. 

Therefore, if the employee still needs to mitigate their damages in this way, their damages arising from the wrongful dismissal may be less than the full reasonable notice period. 

How is the failure to mitigate damages proven in a wrongful dismissal case?

It is important to note that it is not the employee’s responsibility to prove that they mitigated damages. However, preparing this evidence may be helpful if the employer alleges that they failed their duty to mitigate. The employer must prove that the employee failed to mitigate damages after termination. In particular, the employer must show that the employee could have found similar employment if they properly searched for a new role. In other words, the employer must show that the employee could have reasonably avoided some or part of the loss coming from termination. 

The employer must show that the employee failed to mitigate damages, as the courts recognize the power dynamic that often exists in the employment relationship. The employee is often in a vulnerable position because they need to secure another job, and they are the ones who suffer from a wrongful dismissal.  

How can employees with medical conditions fulfill their duty to mitigate a wrongful termination?

For employees with medical conditions, the analysis of the duty to mitigate may be different. The court will consider the employee’s circumstances, including their health conditions if they cannot find a new role during the notice period. 

In Krmpotic v. Thunder Bay Electronics Limited, 2024 ONCA 332, the court found that the employee did not fail to mitigate damages when the employee could not find a new role after termination. In this case, the employee worked as a carpenter for the employer. After a year and a half of working with the employer, the employee was promoted to building maintenance supervisor. The parties did not have a written employment agreement. 

After working with the employer for 30 years, the employee was terminated without notice at the age of 59. He was terminated during his medical leave while recovering from back surgery. The back surgery arose from workplace injuries while he was working for the employer. 

The employer offered the employee 16 months’ salary in exchange for signing a release. The employee refused and brought a wrongful dismissal claim. During the 16 months after his termination, the employer paid for 16 months of salary and continued his benefits plan. 

At trial, the court found that the employee was entitled to 24 months of notice or pay in lieu. 

The employer appealed to reduce the damages, claiming that the employee failed in his duty to mitigate as he did not make efforts to secure a new job during the reasonable notice period. However, the Court of Appeal confirmed the trial decision that the employee fulfilled his duty to mitigate damages. The court found that the employee made limited efforts to find a new job because he was recovering from his back surgery and had several lasting effects of his workplace injuries that made it difficult for him to obtain a new job. The court also found that the employee was not required to provide expert medical evidence to show why he could not search for a new job. The employer’s claim to reduce damages was dismissed. 

Toronto Employment Lawyer Advising 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. Our goal is to ensure that employees understand their rights and receive maximum compensation in wrongful dismissal cases. Haynes Law Firm also assists employers in avoiding liabilities that may arise from terminations that are 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.