Employees who have been wrongfully dismissed from their employment have a legal duty to mitigate. In other words, these employees must look for new employment if they wish to seek a termination payment from their former employers. Regardless of whether an employee successfully secures new employment prior to the end of their notice period, the court will still look to see that the employee took reasonable steps to find alternative comparable employment. If the court is not satisfied that the employee has made proper efforts to do so, it may reduce or deny the termination pay the former employer would otherwise be ordered to pay to the employee. A recent decision, Lake v. La Presse (2018) Inc., 2021 ONSC 3506, underlines the repercussions an employee could face if they fail to take such reasonable steps to mitigate their damages.
The Case of Lake v. La Presse (2018) Inc.
In this 2021 Ontario Superior Court case, the Court reduced a former employee’s common law/reasonable notice period from eight to six months due to the employee’s failure to mitigate their damages.
The plaintiff/former employee in this case was a general manager at the Toronto division of a newspaper based in Quebec. She had come in with two decades of experience working in sales and sales operations for various media companies. At the time of her termination, her annual base salary was $185,000, and she received other benefits such as a car allowance and bonus. Though she held a position of responsibility with the company, she was not a key member of the management team. After about 5.5 years of employment, her employer decided to close its Toronto office and terminated her employment without cause. She was 52 years old at the time. Two years later, she remained unemployed. The Court found her reasonable notice period to be 8 months.
Reasonable Efforts to Mitigate
To determine whether the former employee made reasonable efforts to mitigate her damages, the Court assessed the evidence that was presented. It found that she had participated in networking and attending conferences, and focused some efforts outside of the media industry, but such efforts were unproductive in assisting her with her job search. During the notice period, she applied for 7 roles, 6 of which were vice president roles.
The Court held, however, that these roles had titles that were more senior than any she had ever held and that she focused her job search on positions that would be akin to a promotion to her previous role. Though there was nothing wrong with her having applied for these vice president roles, she should have also applied for more junior roles, such as general manager, and even sales representative if she continued to be unemployed. Ultimately, she had “aimed too high” in her job search and thus she held some responsibility for her failure to re-employ.
The Court also found that she had applied to too few jobs. It further noted that she submitted her first job application over four and a half months after her termination, which was too long. As such, she failed to take reasonable steps to mitigate her damages and her reasonable notice period was reduced by 2 months.
Takeaways for Employers
- As it is in an employer’s best interest to see their former employees re-employ as soon as possible, it may be preferable to avoid terminating employees during low-hire seasons, such as January.
- The common law does not oust contractual entitlements. If an employment contract provides an employee with an automatic 3 weeks of pay in lieu of notice on termination (without any reference to mitigation), for example, this employee would not necessarily need to mitigate. So ensure that your employment contracts include a valid mitigation provision.
- Assist the employee in securing a new, comparable position, such as by offering outplacement services.
- The employer has the burden to prove that a former employee failed to properly mitigate their damages. So do a search of available comparable positions, throughout the employee’s anticipated notice period, and keep a record of the same. Share these positions with the employee, where appropriate.
If you need help with navigating employee terminations or preparing employment contracts with enforceable mitigation provisions, get in touch for a consultation.