Jun 7

Importance of Mitigation – Toronto Employment Lawyer

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The Importance of Mitigation

In a wrongful dismissal matter there is an obligation on a terminated employee to mitigate his or her damages. This effectively means that a terminated employee is required to lessen the damage that was done to them as a result of the termination. In order to reduce the damage (that being the loss of income), terminated employees must actively search for new employment.

That is, the employee must apply for jobs during the time that they would ask to get pay from their past employers.

Employees must reasonably apply for jobs

This obligation stems from the principle that the notice period (or pay in lieu of notice) owed by the employer is designed to make the employee whole, as if they hadn’t suffered damages by being terminated. Courts will not simply award damages for wrongful dismissal while the employee kicks back and waits around for payment to come in. Of course this is to be applied reasonably. If a terminated employee can demonstrate that they have reasonably attempted to mitigate their damages by searching for new employment, the amount of notice owed by the employer would not be affected. However, if the employee fails in this obligation the result on any notice owed could be disastrous. 

Precedent tells us that the employer has the burden of proving a terminated employee has not mitigated to the best of their ability. While this is generally a high threshold to meet, the risk of being found to have failed to mitigate can be extremely detrimental to a wrongful dismissal claim.

Recent Case Law: Applications Required

A recent cautionary tale is the case of Munoz v. Sierra Systems Group Inc., 2016 BCCA 140 where the plaintiff, Ruben Cuesta, sued his employer for wrongful dismissal claiming that the six weeks of notice he was provided was inadequate. At trial, the judge agreed and awarded a notice period of ten months’ pay in lieu of notice. However, on the recent appeal, the notice period was reduced by two months because it was determined that Mr. Cuesta failed to reasonably mitigate his damages by seeking alternate employment following his termination.

After he was let go by Sierra, Mr. Cuesta decided to focus his efforts on his own business he had started to develop in previous years. The trial judge found that this was sufficient and acceptable in terms of attempting to mitigate his damages because “neither party produced cogent evidence of similar employment at the time of termination”. In other words, the trial judge rejected the employer’s argument that Mr. Cuesta had failed to mitigate his damages because neither party demonstrated the availability of similar employment for Mr. Cuesta to pursue, and thus his decision to work on his own IT business was reasonable.

This appeal court disagreed with this finding stating “Typically the burden is met by a plaintiff demonstrating his efforts to find work through job postings and applications made. In this case that evidence was not available because Mr. Cuesta chose to focus on his existing private IT company. There is no suggestion that he did not pursue other work because none was available.” Therefore, even though Mr. Cuesta was technically working on his own business as a means of mitigating, because he failed to prove a lack of availability of work, his notice period was reduced by two months, a total deduction of $19,166.00.

If you were laid off and are concerened about the obligation to mitigate, or need to hire someone to negotiate for your package then you should contact an employment lawyer. You can contact Monkhouse Law today for a free telephone consultation.