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The Latest on the Duty to Mitigate

In most conversations between plaintiff and management lawyers, the terms “unenforceable”, “common law reasonable notice” and “duty to mitigate” are usually thrown around at least once, typically in that order. Most people have some level of understanding of the first two. However, the duty to mitigate remains a bit of a mysterious construct. So, what is it?

The duty to mitigate refers to a common law principle which requires a dismissed employee to make reasonable efforts to mitigate damages arising from dismissal by seeking alternative employment. Put differently, where an employee is dismissed and brings an action for wrongful or constructive dismissal against their former employer, the employee (who will be seeking damages from the employer) has an obligation to look for a job following their dismissal, in order to mitigate their damages (i.e.: try to start making money).

The case law on the principle provides:

1. To mitigate damages arising from dismissal, an employee must make reasonable efforts to seek comparable employment; and
2. It is the employer’s burden to prove the employee’s failure to mitigate their damages.

Reasonable Efforts

What are “reasonable” efforts? As most lawyers love to say: that depends. What is “reasonable” is typically impacted by an employee’s specific circumstances and therefore, a fact-specific determination. However, barring extraordinary circumstances, reasonable efforts may include:

• Preparing/Revising one’s resume;
• Requesting a reference/employment letter from one’s former employer;
• Searching various job sites/boards for “comparable” employment;
• Reaching out to a recruiter in one’s field; and
• Applying to “comparable” employment.

Comparable Employment

The case law has held that “comparable employment” does not mean “any employment”. Rather, it is employment comparable to the dismissed employee’s employment with his or her former employer in terms of

• Status;
• Hours; and
• Remuneration.

Employer’s Burden

The leading case on failure to mitigate is the Supreme Court of Canada’s decision is Michaels v. Red Deer College, 1975 CanLII 15, which provides that in order for the employer to discharge their onus in proving that the employee failed to mitigate, the employer must establish that:

1. The employee did not take reasonable steps to seek comparable employment; and
2. Had the employee done so, he or she could have procured comparable employment.

This is a heavy burden for employers. They must first establish (based on evidence that they gather from the employee) that the employee’s steps to seek comparable employment were not reasonable. Then, if the employer is able to overcome this first hurdle, they must face the second “hypothetical” hurdle of establishing that had the employee taken reasonable steps, they could have found comparable employment.

Failure to Mitigate

So what happens if an employee comes across a “comparable” position and turns it down? This scenario unfolded in the recent decision of Gannon v. Kinsdale Carriers, 2024 ONSC 1060, where the employee was dismissed without cause after 22 years of employment due to the closure of the business. Upon informing the employee of her dismissal, the employer also shared the contact information of another company in the same industry, for the employee to contact and seek employment. The employee later proceeded to contact the other company and in fact received an offer of employment. The employee turned down the offer of employment however, resorting to the “see what’s out there” approach.

The employer naturally argued that the employee failed to mitigate her damages and the Court found that the employee rejected “comparable employment” to her detriment. She was therefore not entitled to reasonable notice damages due to her failure to mitigate her damages.

Key Takeaways for Employers

• Employers have a heavy burden in proving an employee’s failure to mitigate.
• Employers facing closure or an asset transaction should seek advice as to how they may assist employees in their “reasonable” steps to seek comparable employment. Reach out to our team at CCP to discuss how we can help you with your transition.
• If you are aware that a dismissed employee has turned down “comparable” employment, reach out to our team at CCP to discuss how we can support you in your post-termination obligations.

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