Q&A: The Employee's Duty to Mitigate Loss

Mitigation is a legal concept and can be difficult to understand. With this in mind, this article seeks to lay out clearly what the duty to mitigate requires and what it may mean for you.

Q. What is the 'Duty to Mitigate Loss'?

A. The Duty to Mitigate Loss is an obligation put on all former employees who claim wrongful dismissal. It requires that any individual who loses his or her job seek alternative comparable employment as soon as possible. As the purpose of reasonable notice of dismissal is to help tide over workers until they can find re-employment, the Duty to Mitigate Loss is the justice system's way of making sure former workers play their part by actively looking for work.

Q. What happens if I find a new job?

A. If you find a new job during the notice period (i.e. the time for which the employer is obligated to pay you severance) then any income from the new position may be deducted from the total severance owed to you by your former employer.

Q. If finding a new job will reduce my severance, should I just not look for work?

A. If you fail to look for work, and the employer can prove this fact, then a court may reduce your entitlement to severance. The reduction will be proportional to how far the court considers your efforts to have fallen short.

Because of the possibility that new employment may reduce your entitlement to severance, it is important if you lose your job to act quickly. More often than not, an employee's case for wrongful dismissal grows weaker with passing time.

Q. How should I try to mitigate?

A. If you have lost your job, you should do the following things to mitigate your losses: 

  • Make reasonable efforts to find a similar replacement job. You can get started by:
    • Ensuring your Resume is updated;
    • Asking people to provide you with a reference;
    • Regularly checking job listing sites online such as Indeed, Monster and Workopolis;
    • Regularly checking local newspapers;
    • Contacting a Search Firm/Headhunter;
    • Phoning employers that may be hiring; and
    • Applying for any desirable position once found.
  • Keep Track of your job hunt. The court will want to know what you did to look for a job. Be prepared in advance by keeping a record of what you did and when. Include detailed information such as:
    • Positions you applied for (marking down the name of the employer, your date of application and the position sought);
    • The dates and websites you searched for job postings;
    • The dates and times of any telephone calls you made to find work; and
    • The dates and times of any interviews you had during your job search.

A chart like the one below, may be helpful to set up and use:

July 5, 2012 Updated Resume; checked the newspaper for Bank Manager positions; found a position with X Corporation; completed online application form and submitted Resume by email. Received email notification acknowledging acceptance of application; deadline is July 12, 2012.
July 7, 2012 Searched online at jobs.ca; found a suitable position with Y Corporation as a Bank Manager; applied by email for the position (saved the email) Application submitted; deadline for submissions is Jul 12, 2012.

Q. How far does the Duty to Mitigate Loss go?

A. The Duty to Mitigate Loss has its limits. For instance, you are only required to seek comparable replacement work. So, to give a simple example, a former bank manager would not be expected to apply for job openings at the local Burger King.

The following are a list of things you typically would not have to accept as part of your Duty to Mitigate Loss: 

  • Accept the first job offer you are given (unless this position is of a comparable nature and at a comparable rate of pay);
  • Move to a different city to find work;
  • Accept a job that is completely unlike your prior position; or
  • Accept re-employment with your old employer, if this would objectively expose you to an atmosphere of hostility, embarrassment or humiliation.

If you have lost your job, and want to challenge your severance package, make mitigation one of your top priorities. If you make and record reasonable efforts to search for new work, any claim you may have to wrongful dismissal will be considerably strengthened.

If you have questions about the duty to mitigate, please contact us directly at: 613-238-4430 or info@vwlawyers.ca.