Impact of Starting a New Job on Negotiating a Severance Package

Starting a New Job after Termination: Implications for Severance Package Negotiations and Wrongful Dismissal Claims

When an employee faces a wrongfully dismissal or constructively dismissal by their employer, the subsequent search for new employment can significantly impact the outcome of any potential severance negotiation or legal claim. In this employment law article, we will explore the complex interplay between finding new employment and the employee’s rights under Ontario employment law.

An Employee’s Duty to Mitigate

A fundamental principle in employment law is the duty to mitigate losses. This means that a dismissed employee must take reasonable steps to find new employment to minimize their financial loss. However, this duty does not require an employee to accept any job offered. only one that is comparable to their previous position in terms of salary, benefits, and working conditions.

Impact of New Employment when Negotiating Severance Packages

The timing of an employee finding new employment relative to the dismissal can influence the calculation of severance pay.

New employment before negotiations: If an employee finds new employment before negotiations for a severance package begin, the employer may argue that the employee’s earning capacity has been restored (that is, the employee has already mitigated their wrongful dismissal damages), reducing the amount of severance owed. However, the new job must generally be comparable to the previous position for this argument to hold weight.
New employment during negotiations: If an employee finds new employment while negotiations are ongoing, the employer may still argue that the employee’s earning capacity has been reduced. However, the employee can counter this argument by demonstrating that the new position is significantly different from the previous one or that they continue to experience financial loss.
New employment after reaching a settlement: If an employee finds new employment after reaching a settlement agreement through a severance package containing financial compensation for the employee’s job termination, it generally does not impact the severance payment, as the amount has already been agreed upon. However, one important exception may be whether or not there is a “mitigation clawback” as a term and condition of the severance package, whereby a new job may interfere in the employee’s salary continuation.

The Role of Constructive Dismissal

In cases of constructive dismissal, the timing of new employment can also impact the employee’s claim. If an employee finds a new job quickly after the employer’s actions that constitute constructive dismissal, the employer may argue that the employee has mitigated their losses and suffered no significant financial damages. However, if the new job is significantly inferior to the previous position, the employee may still have a valid claim for constructive dismissal.

Good Faith and Fair Dealing

Both the employee and the employer owe each other a duty of good faith and fair dealing. In that regard, following a wrongful dismissal or constructive dismissal, the employer must treat the employee honestly and provide the employee with their legal entitlements to a fair severance package. Similarly, the employee should not deliberately delay finding new employment to inflate their severance claim, and may be required to disclose the fact they got a new job if it is a term or condition of the severance package.

Practical Considerations

Document everything: Keep a detailed record of the job search, including resumes, cover letters, job applications, and interview correspondence. This documentation can be crucial in supporting the employee’s position.
Consider the new job offer carefully: Before accepting a new job, carefully evaluate the position’s terms and conditions to ensure it is comparable to the previous role.
Seek legal advice: Consulting with an employment lawyer in Toronto can provide valuable guidance throughout the process, helping to protect the employee’s rights and maximize their severance package.

The Impact on Wrongful Damages

If the new job is significantly inferior to the previous position, the employee may still be entitled to damages for the termination of employment. In making this determination in a wrongful dismissal or constructive dismissal claim, the court will consider factors such as:

Difference in salary
Loss of benefits
Loss of pension
Changes in job responsibilities
Impact on career prospects

Practical Tips

Seek legal advice promptly: Consulting with a Toronto employment lawyer as soon as possible is crucial.
Document everything: Maintain detailed records of the job search and employment.
Consider all options: Evaluate the new job offer carefully, considering factors beyond salary and benefits.
Understand your rights: Be aware of your rights under employment law and how they may be impacted by finding new employment.

Conclusion

Finding new employment after being wrongfully dismissed or constructively dismissed can be a stressful and challenging experience. Understanding the legal implications and taking proactive steps to document the job search process can help employees protect their rights and maximize their severance entitlements. It is essential to consult with an Ontario employment lawyer to assess the specific circumstances of each case and develop a tailored strategy.

Book a Consultation with an Employment Lawyer in Toronto

At Bune Law, we understand and are familiar the complexities of workplace law and are committed to helping both employers and employees navigate these challenges. Whether you are an employer or employee dealing with employment contracts, workplace disputes like a wrongful dismissal or constructive dismissal, or simply need guidance on your rights and obligations for a severance package review and negotiation, our experienced employment lawyer is here to assist you.

Book a confidential consultation with our Toronto employment law firm to protect your legal rights to understand your options and protect your rights.

Why Choose Bune Law When You Need an Ontario Employment Lawyer?

Experience in all areas of workplace law, including wrongful dismissal claims, constructive dismissal claims, severance package reviews, severance package negotiations, discrimination and human rights disputes, and employment contract reviews.
Proven track record of successfully resolving workplace disputes through negotiation, mediation, and employment litigation.
Compassionate and personalized approach to each case, ensuring tailored solutions that meet your specific needs.

If you need a Toronto employment lawyer who is committed to delivering strong results and proactive solutions, please contact Bune Law online or by phone today at 647-822-5492.