Employee Dismissals and Wrongful Dismissal

Duty to Mitigate

The duty to mitigate arises under the common law when an employee is terminated without just cause.  It requires the employee to take reasonable steps to lessen or alleviate the losses arising from the dismissal. This means that an employee has a legal obligation to take reasonable steps to attempt to find new employment. A court will reduce any award ultimately made to the employee by the amount of employment income he/ she earned from other sources during the reasonable notice period.

The idea underlying the duty to mitigate is that the purpose of providing reasonable notice of termination is to give the employee time to find new employment. The idea is not to reward the employee for his or her past service or to punish the employer for dismissing the employee.

The employer bears the onus of proving that the employee failed to take reasonable steps to attempt to mitigate his/ her damages. In order to successfully assert a failure to mitigate, the employer must prove that the employee would likely have found a comparable position reasonably adapted to his or her abilities and that the employee failed to take reasonable steps to find that comparable position: Link v. Venture Steel Inc., 2010 ONCA 144 at para. 73. The employer must show that the dismissed employee’s conduct was unreasonable, not in one sense, but in all senses: Furuheim v. Bechtel Canada Ltd.(1990), 30 C.C.E.L. 146 (Ont. C.A.).

If an employee fails to take reasonable steps to attempt to find new employment, a court may reduce the amount awarded to the dismissed employee. Therefore, it is important for a dismissed employee who is considering taking further action to document his/ her job search, in order to be able to establish that he/ she has taken reasonable steps to find new employment.

An employee does not have to take every action possible to mitigate. Rather, a reasonable effort is required; see Gust v Right-of-Way Operations Group Inc., 2016 BCSC 1527. Searching for similar work is sufficient. For a discussion of the relevant legal test for mitigation, see James v The Hollypark Organization Inc., 2016 BCSC 495.

The duty to mitigate does not require the employee to take just any job that comes along. Rather, it requires “constant and assiduous application for alternative employment, an exploration of what is available through all means”: Smith v. Aker Kvaerner Canada Inc. 2005 BCSC 117

The duty to mitigate may require an employee to accept another job offered by the employer, as long as the new job is not at a lower level than the previous one, and the change does not amount to constructive dismissal. Similarly, a dismissed employee may have to accept an employer’s offer to work through the notice period; see Evans v Teamsters Local Union No 31, [2008] 1 S.C.R. 661. Retraining may be considered part of an employee’s mitigation efforts, if it is to enter a field with better employment prospects.

An employee in the late stages of pregnancy may not be required to seek new employment until several months after the birth of her child. The employee’s perception of what is reasonable is generally given more weight by the courts than that of the employer. The duty to mitigate may not require an employee to accept a job for which he/she is overqualified: see Luchuk v Starbucks Coffee Canada Inc., 2016 BCSC 830.

The duty to mitigate does not apply to the compensation required based on length of service set out in the ESA. An employee is entitled by statute to statutory termination pay, regardless of whether the employee searches for or finds new work.

An employee may not be required to mitigate when his/ her employment contract specifies a fixed notice period (or pay in lieu), and the employment contract does not specifically require mitigation.

An employee may still required to mitigate his damages if he is constructively dismissed.

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