Losing a job is a stressful event made worse if you have reason to believe you are the victim of wrongful dismissal. While a wrongfully terminated employee can seek out damages from their previous employer, they also must mitigate those damages. Duty to mitigate determines how much compensation in damages, if any, a previous employer is due to pay in a wrongful dismissal case.
What is Duty to Mitigate?
The Employment Standards Act entitles workers who were fired without just cause to a proper notice period after their termination or compensation in place of this notice period. Terminated employees have a duty to mitigate, meaning they must search for a comparable job to the one they were dismissed from. Wrongful termination damages are not meant to serve as either a reward for a dismissed employee or a punishment for the previous employer, but rather as a way to lessen the financial burden wrongful termination causes.
What Is Necessary to Mitigate Wrongful Termination Damages?
The duty to mitigate involves taking reasonable steps to search for a job similar to the one lost. This can include improving a resume, improving work skills, and looking for a job through anything from online job boards to job fairs. The most important part of mitigating damages is to have a record of any action taken and the results of those actions.
Looking for comparable jobs is critical when mitigating damages. Dismissed employees should only accept a job during this period that offers similar pay, seniority, hours, and benefits. If a comparable job cannot be found in the notice period, the dismissed employee is not penalized.
Mitigation of Loss Results
There are usually three possible outcomes for these cases.
Failure to Mitigate Damages
If a dismissed employee doesn’t search for work or the steps they took to search for work are not deemed reasonable, damages may be reduced. Depending on the circumstances, the previous employer may no longer have to pay any damages. This is why it’s so important to use due diligence when searching for comparable employment and thoroughly document every action you take.
Successful Mitigation of Damages
In this situation, a dismissed employee searches for and finds comparable work during the notice period. Any income earned at this new position is deducted from the damages owed by the previous employer. If the new position pays more than the previous job, all damages owed are eliminated for the period of time the dismissed employee worked at their new, higher-paying job. If a lower-paying job is accepted, the previous employer will fight to have damages further reduced by arguing that the dismissed employee had more time to find a comparable job.
Attempts to Mitigate Damages
This scenario means that the dismissed employee took all reasonable steps to find comparable employment during the notice period but was ultimately unsuccessful. When it comes to damages earned, this is the best outcome for the employee since their previous employer would have to pay damage rewards in their entirety.