The Balancing Act: Navigating the “Duty to Mitigate” in Ontario Employment Law
Picture this: you are an employee having worked for the same company for nearly 12 years. However, as a result of recent “corporate restructuring” or “downsizing,” your employer has informed you that the company “has to let you go.” As a result, you feel you have just experienced a wrongful termination (or unjust dismissal). Disgruntled, you sue your employer in a wrongful dismissal claim, where you rightfully seek a hefty severance package. But hold on! There’s a monkey wrench in your plan – this thorny issue of an employee’s “duty to mitigate.” And guess what? It applies to both you and your employer, creating a legal tightrope walk for both parties.
What is an Employee’s “Duty to Mitigate” in a Wrongful Dismissal Claim?
Simply put, since Ontario employment law follows basic contract law principles, this rule means that an employee cannot sit idly (lazily) by to watch their income losses grow after suffering a wrongful dismissal. In other words, even if the employee is wrongfully dismissed from their job, they have to take reasonable steps to look for a new job, and if they do not, a court could reduce whatever amounts the employee is required to pay them. In essence, the duty to mitigate a double-edged sword that applies to both employers and employees.
From an employer’s perspective, while not technically a get out of jail free card, this “duty” forces the employee to lessen their financial damages even if their employer has breached their employment contract with a wrongful dismissal (or constructive dismissal). Among other things, it means the wrongfully dismissed employee must actively and reasonably search for comparable employment while their wrongful dismissal case unfolds, such as looking at job boards, contacting people within their network, conducting interviews and, most importantly, applying for jobs online or in person. Why? Because the court wants to ensure you’re not just sitting around, letting your income gap widen.
When it comes to the Duty to Mitigate, “Reasonable” is the Key Word
When discerning whether an employee has put enough efforts to look for comparable job, the standard is “reasonable”. In other words, court considers factors like an employee’s age, experience, the job market, and even their health limitations to determine the nature and extent of their job search obligations. Most importantly, an employee is not required to accept any or every job offer that comes their way, especially if it’s significantly below their previous role (in terms of job title, responsibilities, work location, compensation, and so on).
The Employee’s Strategy:
For wrongfully dismissed or constructively dismissed employees, the duty to mitigate translates to actively seeking comparable employment after a wrongful dismissal. This means:
- Actively searching and job hunting: Regularly scouring job boards, networking, and attending interviews.
- Applying: Submitting applications for positions aligned with your skills and experience, even if they pay slightly less.
- Considering reasonable offers: Accepting jobs with similar pay, duties, and responsibilities. In most cases, an employee is not required to accept an unreasonable offer or sacrificing their career goals just to mitigate.
- Documenting efforts: Keeping a record of job applications, interviews, and rejections.
Failure to mitigate can lead to a reduction in severance pay, as the court might consider the loss avoidable. But as discussed above, the legal standard is “reasonable.” Personal circumstances, relocation limitations, and skillsets all play a role.
Failing to Mitigate: The Potential Consequences:
From an employee’s perspective, if you don’t make a reasonable effort to find new work, your employer can argue you haven’t mitigated your losses, potentially actually reducing your financial compensation (severance package or wrongful dismissal damages). So, it is important to take your job search seriously, document your efforts, and seek legal advice if unsure about your obligations.
If You are an Ontario Employer, You Have Responsibilities Too!
When it comes to an employee’s duty to mitigate, employers are not off the hook, either! While the employee attempts to mitigate their wrongful dismissal damages, employers have your own “duty” of some sorts – that is, to prove that the employee has not properly complied with their duty to mitigate.
Likewise, it is important for employers to keep in mind that they played a part in the employee’s career journey, and hindering or not facilitating their job search through delays or negativity reflects poorly on you.
- Providing clear termination reasons: Helping the employee understand the terms and circumstances in which their employment may be terminated while allow the employee a reasonable opportunity to tailor their job search accordingly.
- Offering career outplacement services: Supporting the employee’s transition through career counselling or job search assistance
By fulfilling their duty, employers can demonstrate good faith and potentially reduce their overall liability in wrongful dismissal claims. More importantly, in some cases, assisting the employee in mitigating (finding a comparable new job) will actually help an employer by reducing the amount of the employee’s financial compensation (severance pay or termination pay) in the severance package or wrongful dismissal awards they will have to eventually provided. When employers “mitigate” through these options, they can potentially reduce their severance liability and maintain a positive workplace culture.
Like most areas of Ontario employment law, it’s not as simple as “do this” or “don’t do that.” Each and every case hinges on its own unique circumstances. So, whether you are an employer or employee dealing with a wrongful dismissal or constructive dismissal case and unsure where you stand, consulting an employment lawyer is always wise. After all, navigating the “duty to mitigate” requires a steady hand and a keen understanding of the legal landscape.
If you are an employee who believes you have a good reason to resign from your job but want to ensure a smooth and proper transition to avoid a wrongful resignation claim from your employer due to workplace harassment or hostility, or if you are an employer who believes your employee abruptly left in a wrongful resignation, or are experiencing other workplace, or about any other common workplace issues, please call an experienced Ontario employment lawyer to discuss your options and next steps on how to deal with a wrongful dismissal. As an employment law firm in Toronto, Bune Law has reviewed and negotiated improvements to many severance packages. You will review and get guidance on your severance package before you agree to sign any termination documents, and help ensure that your severance package is fair and reasonable.