Following a termination, employees have an obligation to take reasonable steps to find other employment to minimize their wrongful dismissal damages. Asserting that an employee has failed to comply with their duty to mitigate is a strong tool for employers looking to reduce the amount of damages owed to an employee. However, demonstrating a failure to mitigate is not an easy task. The burden of proof rests with the employer to prove that the employee could have found another job had they properly complied with their duty to mitigate. It is therefore essential for employers to also play an active role in the mitigation process.

What is the duty to mitigate?

The duty to mitigate refers to an employee’s obligation to take reasonable steps to search for a new job after being dismissed from their employment. The duty to mitigate can also include an obligation to accept an offer of comparable employment from the terminating employer. The concept of mitigation is rooted in the idea that an employee should not passively accept the financial loss that arises from a termination but rather should actively seek to reduce that loss.

Mitigation plays an important role in wrongful dismissal cases as the value of an employee’s wrongful dismissal case is largely dependent on how quickly the employee can find another job. If an employee successfully secures alternative employment during the notice period, the employee’s wrongful dismissal case will typically only be worth the period of time they remained unemployed, subject to some exceptions such as the employee’s minimum statutory payments which must be paid without condition. For this reason, it is largely beneficial for employers to assist their terminated employees in finding other work as soon as possible.

What can employers do?

Employers should not assume that they have no role in an employee’s duty to mitigate. Rather, the courts have been clear that it will be up to the employer to show that the employee would have found other work had they looked properly. The level of assistance an employer provides an employee in their search for new work is also a relevant factor that will be considered by the courts.

In 2024 ONSC 1035, the court reiterated that a bald assertion that an employee has failed to mitigate will not be successful and that an employer must present evidence that it offered the employee assistance during their job search. In this particular case, the employer failed to provide the employee both job counselling and a reference letter and it also did not direct the employee to any job leads. The court specifically called out this lack of assistance and ultimately concluded that the employee had not failed to mitigate. The court further confirmed that evidence of other individuals in similar positions being successful in their job search during the period of time the employee was unemployed is insufficient to prove a failure to mitigate, especially when the employer did nothing to assist the employee with their search.

Importantly, the court also re-confirmed that mitigation only needs to be reasonable, not perfect. Personal factors will also be taken into account when assessing whether an employee has complied with their mitigation obligations. In this case, the court found that the employee’s decision not to search for work during the notice period was justified given her daughter’s cancer diagnosis.

While situations like the above are out of an employer’s control, employers can still aid in the transition process in various ways. For example, employers should send the employee relevant job postings on a regular and consistent basis. They should also preserve these postings and their communications in order to demonstrate that there were in fact comparable positions open for the employee to have applied to and that these postings were specifically brought to the employee’s attention. Offering a positive reference letter is also a relatively easy yet effective form of assistance employers can provide to terminated employees and these requests should thus be promptly responded to. Other forms of assistance include connecting the employee with other contacts in the industry or offering resources such as outplacement counselling.

Although some of these measures may seem tedious, it is certainly worthwhile for employers to do all that they can to assist employees in their search for new work given the reduction of the employee’s damages once they do secure new employment. Ultimately, while the duty to mitigate primarily rests with the employee, employers can and should play a significant role in the process, especially if they wish to avail themselves of the benefits of a successful failure to mitigate argument.