When employees are terminated, they are to receive reasonable notice of their termination or pay in lieu of notice. If the employer provides neither, the employee may be able to recover damages in a wrongful dismissal claim. However, after termination, there are obligations on the employee also to fulfill their duty to mitigate damages. Generally, this means that the employee is expected to make efforts to secure a new role. If the employee refuses to accept a comparable offer, the court may find that they failed to mitigate damages, and the employer may be subject to a lower amount of damages. 

This post will discuss the employee’s duty to mitigate and how this can affect damages in a wrongful dismissal case. We will examine a case example, Gannon v. Kinsdale Carriers, 2024 ONSC 1060, in which the court found that the employee failed to mitigate their damages after being terminated by their employer because they refused to accept an offer for a comparable role, as they wanted to head in a different career direction. This post will also provide important takeaways for employees and employers to understand the employees’ obligations to mitigate after termination. 

Damages for Reasonable Notice of Termination

When an employer is terminating an employee, they must provide reasonable notice or pay in lieu of notice. The reasonable notice period would include the minimum standard under the Employment Standards Act and common law notice, which can extend beyond the minimum standard. Under the Employment Standards Act, the amount of notice depends on how long the employee worked for the employer. However, there may be terms in the contract that limit damages under common law. 

The common law standard for reasonable notice depends on several factors, including the employee’s age at termination, the nature of the employment, the length of employment, and the likelihood that the employee will find similar employment, given the employee’s skills, experience, and qualifications. Generally, the employee would be entitled to a longer notice period and, therefore, more pay in lieu for this period if they had worked for the employer for a long time, worked in a management role, and were relatively older at the time of termination. This is meant to recognize that it is difficult to secure similar employment for older employees and those who have worked for the employer for many years, as they tend to be viewed as being set in their ways after working for the employer for such a long period. 

In addition to termination pay, the employee may be entitled to benefits, bonuses, or commissions during the notice period, even if they were not provided sufficient notice. These entitlements can also depend on the terms of the employment contract, which may exclude or limit these benefits. Therefore it is very important to determine the length of the reasonable notice period as it significantly impacts the amount of damages an employee could receive as a result of termination

What is an employee’s duty to mitigate damages after termination?

Employees also have a duty to mitigate damages after being terminated. They are obligated to seek similar employment, which includes a role with similar status, hours, and remuneration to their previous role. 

The employer holds the responsibility of proving that the employee failed to mitigate, which includes showing the following:

  1. The employee did not take reasonable steps to find comparable employment; and
  2. If the employee had adequately searched, they could have found comparable employment.       

An employee’s duty to mitigate would involve finding a new role, such as submitting applications to relevant or comparable postings. Also, if the employee is offered a similar position and refuses to accept it, they may fail to mitigate damages. 

If the employee is found to fail to mitigate damages, their damages for wrongful dismissal will be reduced because they had exacerbated the issue. 

What is a comparable position after an employee is terminated?

Comparable employment includes a comparable position in terms of its status, hours, and level of compensation. It is not required for this new role to be the same as the previous position as long as it is a comparable position that is reasonably adapted to the employee’s abilities. 

In the Gannon case, the court found that the employee did not fulfill her duty to mitigate damages, as she refused to accept an offer for a comparable position. In this case, the employee worked for the employer, a trucking company, for 22 years from 1998 to 2020. She held the roles of dispatcher, accounts receivable, and office clerk. When she was terminated, she was 57 years old. Her salary was approximately $43,000. 

When the employee started, she was hired for an accounts receivable and office clerk role. In 2015, the company’s dispatcher resigned, and the employee took on some dispatch duties. The employee denied doing so. However, she received a wage increase, recognizing that she had accepted new dispatch duties. She claimed that less than half her duties involved dispatch tasks. 

The company was set to shut down by the end of 2020, and the employer sent out a letter to all employees two weeks before the closure to announce the closure. The employee claimed she learned about the company closure when she received the letter.

After the announcement, the employer provided the employee with contact information for another local trucking company. Soon after, the employee contacted this company to inquire about a job. She claimed that the role available was for a full-time dispatcher, even though she had specified that dispatch tasks were not her primary role. She claimed she was not provided any information about the start date and was never extended a formal offer.

However, the court found she was offered a role with the new company. During the interview, the new company clarified that the employee’s salary and hours would remain the same and that the tasks would involve both dispatch and administrative duties. The court found that a verbal offer was made, which was acknowledged by the employee, as she had texted the new company, stating that she had given “this” (i.e. the offer) a lot of thought.

After refusing the offer, the court found that the employee failed to mitigate her damages. The court found that the employer went out of their way to assist the employee in finding new employment, such as referring her to the new company. While the employee wanted to explore other roles and education to move away from her dispatch duties, it was not the employer’s responsibility to fund those pursuits. 

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. We aim to ensure employees 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.