What Does It Mean To Mitigate Your Loss?

Employees who are wrongfully or constructively dismissed have a legal duty to mitigate loss. It is important to know what mitigation means, looks like, and how far an employee is expected to go to mitigate loss.

What does it mean to mitigate loss?

In employment, the duty to mitigate loss requires employees to reduce the damages payable to them by actively pursuing an alternative and comparable employment when the employee is wrongfully dismissed. The duty is based on the principle that a party is not entitled to recover for a loss that could have been avoided.

What does it look like to mitigate loss?

Mitigating loss looks like actively seeking and accepting new employment. An employee in mitigating loss has a duty to act reasonably. What is reasonable depends on the circumstances of the particular case. An employee is not required to accept just any job.

For example, a former manager of a large corporation would not be expected to accept a position as a grocery clerk or server in a restaurant.

An employee’s dignity and prestige have been protected by the courts. Essentially, an employee is not required to accept a job from a former employer that involves a demotion in position or status or return to employment from which an employee has been fired.

However, the courts have held that if “the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships are not acrimonious” then it is reasonable for the employee to accept the position in mitigation until employment can be found elsewhere.

Examples of employees making reasonable efforts to mitigate loss include:

· Updating resume and requesting references

· Regularly checking job listings/job boards

· Contacting employers who are hiring

· Applying for comparable positions

· Relocation (there is a continuing to duty to assess whether relocation is reasonable in the circumstances)

Employers should assist former employees in finding new employment but are not under a legal duty to do so. An employer can assist by providing letters of reference or even offering temporary comparable employment.

Does starting a business satisfy an employee’s duty to mitigate?

Based on previous case law, if an employee starts a business after exhausting attempts at finding new employment, then he or she will have satisfied their duty to mitigate. Self-employment constitutes valid mitigation where an employee has first tried to secure new alternative employment.

Who bears the burden of proof?

Employers who claim an employee has failed to mitigate their loss carry the burden of proof. An employer must show that an employee failed to make reasonable efforts to mitigate and that comparable employment was in fact available.

What if an employee fails to mitigate loss?

If the court agrees with the defendant employer and finds the employee failed to mitigate loss, the notice period to which the employee would have otherwise been entitled to will be reduced. Essentially, the employee’s severance will be reduced.

Does the duty to mitigate apply to fixed-term employment contracts?

Recent court decisions in Ontario show that when parties contract for a fixed term of notice or a contractual amount, the parties have contracted out of the common law approach to reasonable notice.

Mitigation applies where damages are at large and not where the employer has specified a fixed amount of damages, particularly where the contract is silent on a duty to mitigate. If an employer wishes to hold an employee to the duty to mitigate, it must be clearly expressed in the written contract of employment.

Whether you are an employer or an employee, mitigation is essential in wrongful dismissal claims. If you are looking for more information, do not hesitate to contact us and our specialist Employment Lawyers can discuss your matter in more detail over a free consultation. You can reach our office at 905-366-0202 or contact us through our website here.

Nothing in this article should be considered or relied on as legal advice or opinion. This article only provides general information, and should you require assistance, please contact our office to book a free initial consultation.

Call Us
Free Consultation