Wrongfully Terminated Employee's Duty to Mitigate

In Ontario employment law, an employee facing a wrongful dismissal or constructive dismissal has a legal duty to “mitigate”. Put simply, this is a legal obligation that requires an employee who has faced a significant change to the terms or conditions of employment (such as if they were wrongfully terminated or temporarily laid off) to take reasonable steps to find new employment, or to otherwise minimize their financial losses. For example, this means that an employee who has been terminated must make a reasonable effort to look for a comparable new job, rather than simply accepting the termination and not making any effort to find new employment to minimize the financial impact of losing their job. Just as important, an employer should not simply accept the minimal severance pay (or other benefits offered by an employer in a severance package), but speak with a leading employment lawyer about successfully negotiating their financial severance compensation package with their employer.

When Does the Duty to Mitigate Apply?

The duty to mitigate applies anytime an employer has done something that negatively impacts an employee by significantly changing the terms or conditions of their employment. This applies not only in wrongful dismissal cases, but also in constructive dismissal cases, such as:

⁃ a change in job title or responsibilities (demotion)
⁃ a work relocation
⁃ workplace harassment or discrimination
⁃ reduction in remuneration (such as a significant reduction in an employee’s work hours, salary, or bonus pay)
⁃ temporary layoff

Consequences of Failing to Mitigate

For employees, a failure to satisfy their duty to mitigate has important consequences, especially in reducing the amount or value of their financial severance package. Specifically, if an employer proves the employer faulted to mitigate their financial losses, it may be allowed to pay the employer much less severance pay or other benefits an employee may otherwise be entitled to receive following a wrongful dismissal.

In some cases, an employee may also have a duty to accept a job relocation as part of a duty to mitigate. For instance, an employee’s requirement to reduce the financial impact of potentially losing their job might be required take on a new role or within the company, or even in the event the company has decided to move its operations to a new location. However, this will always depend on the change being “reasonable” in the circumstances. Specifically, in such cases, the specifics of the employee’s duty to migrate would depend on the terms of their employment contract.

In other cases, the duty to mitigate may require an employer accepting a new position with the same employer if one is offered, but generally only when doing so would not require the employee to return to a hostile workplace or otherwise an atmosphere of hostility, embarrassment or humiliation.

For example, in a constructive dismissal case called Farquhar v. Butler Brothers Supplies Ltd., an employer who was a senior manager who had been subjected to a unilateral change in his employment, including a substantial salary decrease and a temporary layoff). Soon after, the employer restored the employee’s previous salary, offering the Plaintiff his position back. In court, the employer argued he was not legally required to mitigate by accepting the same position with the employer even though his previous salary was restored. The court agreed, a decision it based on how the employer was treated by the employer, resulting in his constructive dismissal. As such, the court held it was unacceptable to require the employee to return to such a harmful work environment.

For any situation of a constructive dismissal claim, it is important for employees to carefully review any potential changes to the terms or conditions of employment (such as a demotion, pay reduction or relocation) before accepting an employer’s requests or demands, and to always seek legal advice.

Contact Employment Lawyer Today

If you are an employer who is facing a constructive dismissal claim and need employer defence counsel for assistance or representation, or an employee who believes you have been constructively dismissed by your employer and you would like to know if you have the right to sue your employer for constructive dismissal, review your employment contract or negotiate a severance package, our experienced constructive dismissal lawyer at Bune Law can help. Contact us by phone 647-822-5492 or fill out the contact form to the side. We would be happy to assist in your employment law matter as quickly as possible.

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