Upon dismissal from employment, the dismissed employee owes him or herself a duty to take reasonable steps to search for similar work.  This duty was described in Part 1 of this post.  The employee is typically disappointed to learn that, in an action for wrongful dismissal, any income he or she earns in mitigation during the notice period is deducted from the damages that are owed by the employer.  This rule is based in the judicial goal of putting the wronged employee into the position they would have been in, if the employment contract had been performed correctly – i.e. if they had been given sufficient working notice and been paid either to the end of the notice period or else until they found other work and quit.  The goal of reasonable notice damages is to repair the harm done to the employee, not to punish the employer or reward the employee.  On these principles, the employer is not responsible for the avoidable losses of the employee: Red Deer College v. Michaels.

There are three outcomes to the mitigation efforts that a dismissed employee makes.

Failure to mitigate: the employee does not search

If the dismissed employee does not search for work, or if the search steps he or she does take are not reasonable, this can be fatal to their damages claim.  An employee who is found to have failed to mitigate may have their damages reduced for all the time when they could have been searching for work but were not taking reasonable steps to do so.  In actions where the employer does not dispute that the employee was dismissed without cause, this is often the employer’s main attack against the employee’s claim.  Of course, search efforts that are not recorded are unhelpful in deflecting this attack, which is why it is essential for the employee not only to search but also to record the search.

Successful mitigation: the employee searches and finds

If the dismissed employee searches and finds work during the notice period, then any money earned in that new work will be deducted from the damages owed to him or her by the ex-employer, on a dollar for dollar basis.  If the employee earns more at the new position than they did at the old, then the damages claim will be wiped out for the time they were in that higher paying position.  It is important when accepting work to consider the similarity of the new position with the old one.  If the new position pays significantly less than that from which the employee was dismissed, the ex-employer may have an argument that the employee could have found higher-paying work if he or she had kept looking.  This is another way that an employee may fail to mitigate and have their damages reduced.  Employment that is found after the notice period has ended does not reduce damages for reasonable notice.

The employee searches but does not find

From a damages standpoint, an unsuccessful search is the best outcome for the employee.  Where the employee can show by their search records that they took reasonable steps to search for similar work, but that the work was not there or else they weren’t hired to do it despite their best efforts, then damages will not be reduced for failure to mitigate or by actual mitigation.  If wrongful dismissal is proved, the employer will be liable to pay the full amount of damages for the entire notice period.

About the Author: Julianne Yeager advises employees on all aspects of their workplace rights, during and after employment.