By Emily Slessor

This general legal information (not legal advice) is subject to change, and there may be exceptions based on your specific circumstances. You should obtain independent legal advice before taking any action which may impact your legal rights. If you are an employee or an employer and need legal advice regarding discipline or termination of employment surrounding time theft, an OA lawyer will be pleased to assist you with your situation.

The duty to mitigate is a well-established principle in employment law. When an employee is terminated without cause, the employer is legally obligated to provide them with reasonable notice or pay in lieu of notice. However, this requirement is subject to the employee making reasonable efforts to mitigate these damages by seeking an alternate source of income. The common law duty to mitigate imposes an obligation on terminated employees to take reasonable steps to find comparable employment. 

The rationale for the duty to mitigate is to minimize the financial losses resulting from the termination of their employment contract. If an employee fails to seek new employment within a reasonable time frame or does not keep record of their efforts, the employer may be excused from liability. 

The duty to mitigate is a shared responsibility. The employee is responsible for mitigating financial losses, but the employer has the onus of proving that the employee did not satisfy their duty to mitigate. Employers asserting that the employee failed to mitigate must establish that: 

1. The dismissed employee failed to take reasonable steps to search for a job; and
2. A comparable job could have been found if the employee had taken reasonable steps.

Employee Rights & Obligations 

Employees are expected to provide evidence of their job search efforts. Courts are tolerant in assessing mitigation efforts, requiring only that the employee be reasonable, not perfect. What constitutes a reasonable time to begin a job search can vary, and courts consider personal factors. For instance, in De Castro v. Arista Homes Limited, the court found it reasonable for the plaintiff to delay her job search due to her daughter’s cancer diagnosis and subsequent death, concluding that the employer failed to prove a failure to mitigate. 

Employees are not required to accept any available job, but rather to seek comparable employment. Comparable employment is defined as a position reasonably adapted to the employee’s abilities, with relevant factors including job status, hours, and remuneration. However, if a suitable offer of comparable employment is rejected, it can constitute a failure to mitigate. In Gannon v. Kinsdale Carriers, the court found that the plaintiff failed to mitigate her damages by refusing an offer of comparable employment. 

The Supreme Court of Canada has held that employees may be required to accept re-employment with their former employer during the notice period to mitigate damages, provided certain conditions are met. In Evans v. Teamsters Local Union No. 31, the SCC determined that an employee’s refusal to return to work for the union was not objectively justified, constituting a failure to mitigate. A reasonable person should accept such an opportunity if the salary is the same, working conditions are not substantially different or demeaning, and personal relationships are not acrimonious. 

Employer Rights & Obligations 

The employer’s burden of proving a failure to mitigate is significant. They must present sufficient evidence that suitable employment opportunities were available to the employee after termination and that the employee failed to take advantage of them. 

Recent cases, such as De Castro v Arista Homes Limited 2024 ONSC, suggest that employers have a role in assisting employees with their job search. The court noted that employers arguing a failure to mitigate would be well-advised to present evidence of help offered to the employee during their job search. In De Castro, the employer’s evidence was deemed insufficient, partly because they did not provide the employee with job counselling, job leads, or a reference letter. 

Best Practices 

The duty to mitigate is a mutual obligation between the employer and the employee. An employee cannot expect to be compensated for financial loss incurred during the notice period if they do not make a genuine effort to secure new employment. Likewise, employers cannot assert that the employee failed to mitigate without providing evidence of their own efforts to help the employee in securing comparable employment after termination.

When an employee has been terminated without cause the importance of a collaborative approach between employers and employees is critical to reduce employer liability. The practice tips outlined below not only allow employees to secure new job opportunities more quickly but also demonstrate the goodwill of the employer which could be useful in reducing their liability in court. 

• Employee Record Keeping: Employees should maintain a detailed log of the jobs they have applied for, the application dates, and any interviews they attend. This will be useful evidence to prove that they are actively seeking new employment. 

• Employer Support: Employers should devote efforts to assisting their employees with their job search. This can include offering confirmation of employment letters, reference letters, reaching out to industry contacts, sharing job postings and so on. The employer can rely on these records to demonstrate that despite their efforts to help the employee secure employment, the employee failed to mitigate. 

• Monitoring Job Postings: Both the employee and employer should keep track of comparable job postings as evidence of the availability (or non-availability) of comparable employment opportunities. Employers should be actively sharing any suitable job opportunities with the terminated employee.