What Employee’s Should Keep in Mind: Understanding the Duty to Mitigate
Contract to misconceptions, even after a wrongful dismissal, the story does not end there when it comes to the employment relationship, as employees still have a duty to mitigate.
Imagine this: your employer wrongfully terminates you, leaving you without a job and income. You know from reviewing basic employment law blogs that you are no doubt entitled to damages (compensation), right? Well, not quite. In fact, under Ontario employment law, all employees have to follow a rule called the “duty to mitigate.” Essentially, it means that while your employer is responsible for their breach of contract to provide you with financial compensation in the form of a severance package, you still have a responsibility as an employee to try to lessen the financial impact of your wrongful dismissal.
In practice, as a wrongfully dismissed employee, your duty to mitigate requires you to actively seek new employment to minimize the extent of your financial loss of future income. And when it comes to a wrongful dismissal claim or severance package review and negotiation, the duty to mitigate can significantly affect your employment dispute.
Duty to Mitigate is a Balancing Act: What Employees Need to Know
The duty to mitigate can be confusing, so let’s break it down:
- Actively search for a new comparable job: This is the key aspect: you need to actively search for comparable jobs in terms of your skills, experience, and salary. Attending job fairs, networking, applying for relevant positions online and offline—these are all examples of an employee fulfilling their duty to actively mitigate their wrongful dismissal damages.
- Start your job search immediately: Employee should not wait for their employment lawyer to negotiate a fair severance package, and should generally begin applying to jobs right away (even if still receiving pay from their former employer), unless there is an objectively valid reason not to start begin applying for new jobs after a wrongful dismissal.
- Reasonableness is key: A wrongfully termination employee is not expected to accept just any job, particularly an inferior job consisting of less income, prestige or entry-level role. The job you seek should be “comparable” (similar) to your previous one in terms of factors job title, responsibilities, salary, benefits, and work location.
- Document your efforts: Keep track of your job search activities, including dates of applications, interviews attended, and any offers received or rejected. This documentation is crucial evidence for your wrongful dismissal claim or severance package negotiations with an experienced employment lawyer.
- Be reasonable: If you reject a reasonable offer without an objectively valid reason (such as legitimate medical issues), it could be seen as a failure to mitigate and potentially reduce your damages, resulting in a court of your former employer reducing the amount of your severance package financial compensation.
How a Failure to Mitigate Can Be a Thorn in an Employee’s Side
Generally, if an employee fails to fulfill their duty to mitigate, their wrongful dismissal damages (severance package) might be reduced. This means the amount of financial compensation you receive from your employer could be lower. For example, if you could have found a job within three months of your dismissal when you were offered a reasonably comparable offer to start working with a new company that you refused with a objectively valid reason, the court might deduct the lost income from your severance pay compensation.
To some extent, it seems that an employee’s duty to mitigate is unfair and intended to punish an employee when they’re already down after a wrongful dismissal, all to help an employer reduce their financial responsibilities to provide a fair severance package. However, from the contract law perspective, it is simply a way to ensure fairness and prevent abuse of the system. By actively seeking new employment and documenting your efforts, you can fulfill your duty and maximize your chances of receiving fair compensation for your wrongful dismissal. This is no different from how the duty to mitigate applies in any breach of contract situation, such as a company who loses a contract with their supplier costing them loss of income, who cannot simply sit idly by to watch their damages grow, but must search for a new supplier to start working with to reduce the impact on their business operations.
Examples Where Duty to Mitigate Applies
An employee’s duty to mitigate applies in the following situations:
- an employee is wrongfully dismissed
- an employee is constructively dismissed
- an independent contractor whose fixed-term independent contract agreement is terminated before its expiry date
- an employee in a fixed-term employment contract that is terminated before its expiry date and there is contractual term requiring the employee to mitigate their damages upon termination of employment
Key Lessons:
- The duty to mitigate is a very important concept in Ontario employment law for wrongful dismissal cases and severance package negotiations.
- Generally, all employees have a responsibility to take reasonable steps to find new employment and minimize their wrongful dismissal financial losses.
- Key requirements include actively searching for jobs, applying for comparable jobs, networking, and documenting mitigation efforts.
- Failing to mitigate could significantly impact (reduce) an employee’s wrongful dismissal or constructive dismissal severance package.
- Seek legal counsel from an Ontario employment lawyer to understand your obligations and ensure you’re protected.
Call Employment Lawyer Toronto Today
If you are an employee who believes you were wrongfully dismissed from your employment with or without a fair severance package, call today to discuss your options. 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.