Dismissed Employees’ Obligation to Mitigate in Canada

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Mitigation is one of the most important obligations imposed by law on dismissed employees. Failure to mitigate could have significant negative impact on the award of damages. Many dismissed employees are unclear about this duty and end up compromising their valid case unnecessarily. This lecture helps dismissed employees understand this obligation in simple terms.

This lecture is taught by Amer Mushtaq, LL.B., M. Engineering , B.Sc. (Hons.), who is the Principal and Founder of the law firm, Formative LLP. Through his YouTube channel, YouCounsel,

Amer shares practical advice from his years of legal experience to help anyone access justice and achieve their goals. Subscribe today to learn more.

Amer also offers in-depth courses (by paid subscription) on various legal topics through http://www.youcounsel.ca/.


Show Notes:


Lecture Slides:

Machine Transcription:

Welcome everyone. This is Amer Mushtaq from YouCounsel.

Today we will talk about obligation to mitigate in employment law circumstances. It is an essential obligation in most of the employment law cases in fact it is a duty on the part of the terminated employee to try to mitigate his or her damages. We will talk about it. We will explain what does it mean to mitigate and what is it that the employee needs to do. Before we begin, we will provide you with our usual disclaimer: that this course is not legal advice. If you have any specific questions please contact your lawyer or paralegal

Let’s begin with mitigation. What does it mean? We will talk about mitigation in its broad sense. Mitigation is essentially the reasonable action that a party (the aggrieved party or the party who has suffered any loss) must take to minimize the loss that it has suffered. Let us explain that by way of an example which will make it easier. Assume that you had a car and you were trying to sell that car as you were leaving the country or you were transferred to another province. You had to sell that car and there was a time crunch. You get into a sales contract with someone who is interested in buying your car. You come to an agreement and the person is willing to buy your car—let us say for $20,000. You have set a date and time when the person will come and give you a check for $20,000 and take away the car. Based on that, you refuse any other offers that other parties that may be interested in buying the car from you and you turn them away because you have already entered into a contract. For some reason the person who has entered into contract with you does not fulfill the contract (does not pay you the money), basically ignores the contract completely. If that is the case then you have suffered a loss of $20,000 (your damages) because you have a valid contract which is not being enforced

What does the law ask you to do? The law asks you to try to mitigate your damages. In this case, how would you mitigate your damages? You will try to sell that car to someone else within the time frame that you may have. Let us say if you are in a time crunch and only have a day left then you put your ad on Kijiji or in the newspaper. You eventually are able to sell the car for a loss; you sell it for $15,000. Your damages really are now $5,000 against the person who had entered into a contract with you for $20,000. This is what you have done for your initial damages for $20,000—you took steps to sell the car to someone else because the law says you have to try to mitigate those damages and you were able to partially mitigate—meaning out of $20,000 you recovered $15,000 and the loss is $5,000. Now, imagine that if you were able to sell the car for $25,000. Then you actually have no losses against the party that you had contracted with. You were able to fully mitigate your damages even though the other party breached the contract—there are no resulting damages. You are not entitled to any money if you were able to recoup all of your losses. That is what mitigation is and that is what it does—it tries to, in a way help the party who has actually breached the contract by imposing on you to try to minimize your damages.

In employment law context what does this mean? In most of the wrongful dismissal cases the duty to mitigate arises because in most of wrongful dismissal cases what you are telling the court is that you have suffered loss or damages in the amount of X amount of dollars ($20,000/$100,000/$200,000) because that was the termination /severance pay /reasonable notice that you were entitled to that the employer did not provide. In that case the law imposes an obligation on you to try to mitigate those damages. If the damages were $100,000, the court imposes a duty on you to do certain things so that the damages could be reduced from $100,000. That’s what is an obligation to mitigate in employment law context. I will talk about how you go about doing this.

One note that you want to keep in mind is that the obligation to mitigate in employment law does not arise in every single circumstance. There are some specific circumstances where you don’t have an obligation to mitigate. Those are very few circumstances. It is not common. You must contact your lawyer and figure out whether you have an obligation to mitigate and if you do, then you make sure that you fulfill that obligation? What do you do in employment law context to mitigate your damages? Essentially, you make efforts to look for another job. Right, that’s how you will mitigate because your damages are employment damages which your previous employers refuses to give you—salary for $X amount for X amount of months. The way you can mitigate is by working for another employer for X amount of months for X amount of dollars. That’s how you can mitigate.

What are the things to keep in mind? The obligation to make an effort. The court requires you to make reasonable efforts and what does that mean? If you are for example based in Toronto or in the GTA and you are working in GTA, the law does not require you to go look for a job in Alberta or Saskatchewan just because you have an obligation to mitigate because that will be considered unreasonable. You don’t have to fetch every single job that is relevant to you around the entire country but reasonable efforts are required.

The second part that you want to keep in mind is that you have to look for a comparable job. What that means is it has to be comparable to the previous job that you had at the former employer. For example, if you were a Manager of Accounts and and you have to look for a job, then you are not required to apply for jobs as the cashier at Walmart or McDonald because that’s not a comparable job. Comparable is in terms of the duties that you had and also comparable in terms of pay. If you were making $100,000 at the previous job, the law does not require you to go look for a job which pays you $75,000. It doesn’t have to be a match for dollar-to-dollar but comparable. If you are making $100,000, then $90,000 or even $85,000 may be considered comparable but anything less than that may be considered not comparable. You make reasonable efforts to look for a comparable job.

Final point is very important. You must keep full records of all of your activities and what that means is (1) that you must keep a summary / a log of all of the activities that you do or you perform in your efforts to mitigate your damages; and (2) then you keep all the corresponding evidence. If you have been sent an email you must keep records of those emails; if you have been sending letters, faxes or making phone calls—you must keep evidence. This matter might go to trial and you may have to prove that you actually made those efforts. Your word alone is not sufficient—you must prove this with evidence that you actually make those efforts.

Let me give you an example of how do you go about making those efforts. Here is something that we ask our clients to look into with respect to job effort. Let’s say we usually give them the copy of this spreadsheet and say you want to make sure that you are following this. This is an example of an Excel spreadsheet. It has multiple columns (1) a date—you want to make sure of what date you are performing that activity; (2) if you’re looking for a job at a search engine like Indeed or Workopolis or a specific company website or a recruiter—you want to document that; (3) the name of the person that you contacted, phone number, email address, etc.; (4) in what industry you are looking for that job; (5) what was the title of the job; (6) was it a full-time job or part-time job; you want to look at all of these things (7) then what was the annual salary—what was the income that was being offered; (8) what was the location; (9) how did you apply—did you send an email, did you call, did you attend in person; (10) how many job postings did you review; (11) how many postings did you actually apply to. These are some of the things and then (12) what was the outcome of these job searches? Did you get any interviews; did you get any call back; whatever the response was you want to document that. This spreadsheet is a summary, it creates a log for you—which you can review, the lawyer can review, opposing counsel can review, the judge can review or the mediator can review. They have a summary before them that shows them what kind of activities you have performed. You must also keep the corresponding evidence. If you send faxes or emails for anything, you must keep those faxes and emails because that is actually what is evidence. You must prove to the other side that you actually performed those activities. That is in terms of job activities. What you do want to remember is: that first of all you want to make sure that you confirm with your counsel or make sure if you are required to mitigate or not—find this out early on. You don’t wait for a few months or midway through your court action. You must know this from the outset of your case. Most lawyers who practice—in our firm as soon as we are retained, we send out a detailed memo to our client basically explaining to them (1) what is mitigation; (2) how they’re required to mitigate; and (3) how do they keep records of that. Then you make sure that you make reasonable efforts to mitigate and that you keep all records.

I’ll give you a quick example of what mitigation entails. I recall one of our clients she lived in St. Catherine. She worked for a video store as a Manager. The entire store closed down. There were no comparable jobs available. She had very limited jobs in her area. Based upon her skill set the comparable jobs that were being posted in her area were either none or minimal. Part of her mitigation effort was that she will look at the newspapers on a daily basis and find that there is no job that she could apply for and then just keep records of those newspapers. At Mediation we had this bundle of newspapers with us basically showing that every single day she went and looked for a job in the newspapers amongst other activities. All of these newspapers are there to demonstrate that there isn’t a single job that was comparable to her skill set. That’s another way. It’s not that you just need to prove what jobs you applied to but whatever activities you did when you look for a job. If you went online and you found nothing you must prove that as well. Then everything you do, for instance calling your friends or attending networking events or meeting recruiters these are all activities that you are undertaking to mitigate your damages. You must record all of that so that the judge / the mediator and the opposing counsel has a full view of what activities you undertook.

Mitigation is an important obligation you cannot ignore it and so it’s important that you have good records, so that lack of mitigation does not end up minimizing your damages. Because if you fail to mitigate your damages the court can reduce your damages and in some cases completely negate any of the damages that you are entitled to, simply because you fail to mitigate your damages.

Hopefully, this gives you a basic understanding of the obligation to mitigate in employment law. Contact us if you have any further questions. Please contact us for any clarifications that you require please let us know and we’ll be happy to add that in the future lectures thank you for watching

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