What Does It Mean To Mitigate Your Loss?

What Does It Mean To Mitigate Your Loss?

Employees who are wrongfully or constructively dismissed have a legal duty to mitigate loss. To mitigate is to take action to reduce the severity or impact of something.

What does it mean to mitigate loss?

In employment, the duty to mitigate loss requires employees to reduce the damages payable by actively pursuing an alternative job. The responsibility principle states that a party cannot be compensated for a loss that could have been prevented.

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.

If the salary and working conditions are the same, it is reasonable for an employee to accept a position in mitigation until they can find another job.

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
  • Lastly, 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. Additionally, 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. In addition, 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, then the notice period will be reduced.

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

When contracting for a set term of notice, the parties have agreed to waive their right to reasonable notice.

If the employer specifies a fixed amount of damages in their contract, mitigation is not required. For the most part, contract of employment must detail any duties an employer wishes to hold someone to.

Whether you are an employer or an employee, mitigation is essential in wrongful dismissal claims. If you have legal matters, please contact us and our specialist lawyers can discuss them. You can reach our office at 905-366-0202 or contact us through our website here.

We highly discourage anyone from seeking out legal advice through this article. This article only provides general information, and should you require assistance, please contact our office to book a free initial consultation.

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