The principle of mitigation of damages is a cornerstone of fairness in wrongful dismissal claims. Dismissed employees are expected to take reasonable steps in order to minimize their financial losses by actively pursuing comparable employment opportunities. At its core, mitigation aims to balance the rights of both employee and employer, ensuring that the employee does not remain unjustly unemployed while seeking compensation and that the employer is not held responsible for damages that could have been reasonably avoided. In fostering this balance, the duty to mitigate safeguards the integrity of legal proceedings and promotes equitable resolutions in dismissal disputes.
The Duty to Mitigate
Employees who have been dismissed are legally obligated to take proactive measures to seek new employment opportunities. This responsibility goes beyond being optional; it is a fundamental legal duty. In fact, the courts examine whether the individual has taken adequate and reasonable steps to find work that is comparable to their previous role. Such efforts might involve submitting job applications, attending job interviews, engaging in professional networking activities, or even pursuing further education or training to improve their employability.
On the other hand, employers bear the burden of proving that the employee failed to mitigate their damages. This involves demonstrating that the employee did not take reasonable steps to secure comparable work, or unreasonably rejected suitable job offers. For instance, in the 2022 case of in Lake v. La Presse, the Ontario Court of Appeal clarified that employees are permitted to limit their job search to positions comparable to their previous roles. Moreover, the court emphasized that “comparable employment” does not mean “any employment” and must align with the employee’s previous status, responsibilities, and renumeration.
A former General Manager at La Presse was dismissed on a without cause basis when the company closed its Toronto office. Initially, the motion judge reduced her damages by two months, citing delays in her job search and her focus on higher-paying roles. However, the Court of Appeal stated that the
“…motion judge erred in principle when, at para. 65, she accepted that, in mitigation, after a reasonable period of attempting to find similar employment, a dismissed employee must begin searching for a lesser paying job…The obligation of a terminated employee in mitigation is to seek comparable employment, which typically is employment that is comparable in status, hours and renumeration to the position held at the time of dismissal.”
Ultimately, Justice Rensberg granted the Appellant damages for wrongful dismissal, calculated on an eight month notice period. The award was made without any deduction for the Appellant’s alleged failure to mitigate, while accounting for the payments already made by the Respondents to the Appellant during the notice period. The appellant was awarded costs of the appeal in the sum of $20,000.00, inclusive of HST and disbursements.
The Importance of Keeping Detailed Records
Taking steps to secure new employment isn’t just a practical choice- it is also a legal responsibility. In wrongful dismissal cases, courts often reduce the amount of damages awarded or may even rule that the employee is not entitled to any damages if the employee fails to demonstrate reasonable mitigation efforts. Such was the case in Gannon v. Kinsdale Carriers in which the court determined that Ms. Gannon, the employee, was not entitled to reasonable notice damages due to her failure to mitigate her damages. Despite being offered a comparable role just two weeks after her termination, for a position that mirrored her previous salary, hours, and responsibilities, the employee chose to decline the opportunity. Notably, Kinsdale Carriers, the defendant employer had actively supported her efforts to secure comparable employment, further underscoring her lack of reasonable mitigation.
In finding that Ms. Gannon failed to mitigate her damages and was, therefore, not entitled to damages for reasonable notice, the Court ordered that Ms. Gannon pay Kinsdale Carrier’s legal costs, which included costs for a 3-day trial and would have likely been substantial.
While mitigating damages is undeniably essential, maintaining detailed and thorough records of job search activities including applications submitted, interviews attended, and networking efforts made, is equally crucial. These records not only serve as proof of the individual’s commitment to mitigating their losses, but also safeguard and protect employees against claims of insufficient effort.
How Far Down Must Employees go in Accepting Employment?
The answer to this question is a nuanced one. Courts generally expect employees to accept reasonable job offers that align with their qualifications and experience. However, they are not required to accept positions that are significantly inferior to their previous toles. In 2023 in Monterosso v. Metro Freightlinger Hamilton Inc., the court found that the employer failed to prove that the employee had not mitigated their damages, as the employee had provided substantial evidence of their job search efforts.
In its analysis, the court emphasized that,
“the burden was on the appellants to establish that the respondence failed in his duty to mitigate and they did not meet that burden. The respondence filed extensive evidence detailing his unsuccessful job search efforts. The appellants acknowledge this evidence but assert that the respondence was looking for work that was beyond the scope of his experience and qualifications. There is no basis in the evidence on which to accept this assertion…the appellants have not met their burden of proving that the respondent failed to mitigate his damages.”
Accordingly, the court dismissed the appeal and awarded the Respondent an all-inclusive costs award in the amount of $17,500.00.
In addition to employees being under no obligation to accept positions that do not align with their qualifications and experience, the courts have held that, if they do take on such positions, any income earned from this work should not be considered mitigation income and does not justify reducing the damages awarded to them.
One such example is the 2017 case of Brake v. PJ-M2R Restaurant Inc. Ms. Brake. the dismissed employee, argued constructive dismissal when she was given an ultimatum to accept a demotion or be terminated. During the notice period, Ms. Brake worked part-time at Sobeys and later took on lower-paying jobs.
The trial court found that Ms. Blake had been constructively dismissed and awarded her damages equivalent to a 20 month notice period, ruling that her refusal to accept the demotion was reasonable as accepting such a position would have been humiliating. Moreover, regarding mitigation, the court emphasized that income from her part-time and lower-paying employment should not be deducted from her damages, as these roles were not comparable to her previous position.
This ruling was upheld by the Ontario Court of Appeal who agreed that Ms. Brake had no obligation whatsoever to accept the demotion and that her mitigation efforts were reasonable. They highlighted that income from inferior employment, accepted out of necessity, should not lead to a reduction in damages.
Recent Case Law Insights
Ontario courts have consistently upheld the principle that employees must take reasonable steps to mitigate their damages. The burden of proof that an employee has indeed failed to mitigate their damages, falls on the employer, and requires clear and objective evidence. In Boyer v. Callidus Capital Corporation, 2025 court of appeal case, the court dismissed the employer’s appeal, reiterating that employees are not required to accept positions that are significantly inferior to their previous roles. The court highlighted that mitigation efforts must be reasonable and proportionate to the employee’s qualifications and experience. Boyer was awarded, as part of the motion judge’s order, all-inclusive costs in the sum of $55,000. Moreover, the employer was ordered to pay Boyer $93,076.92 representing 22 weeks of unused vacation, $525,000.00 plus interest for unpaid and deferred bonus amounts, $1,213,856.98 representing the value of lost stock options, $273,111.22 representing motion costs, and $25,000.00 for the appeal of the two motions. In total, the employer was ordered to pay the employee the sum of $2,185,045.12.
Another notable case that sheds light on the principles of mitigation is the 2024 case of Singh and Kaur v. Feneich. While this matter originated from a failed real estate transaction, its principles are instructive in employment law contexts. In this case, the plaintiffs entered into an Agreement of Purchase and Sale to sell their property to the defendant. However, when the defendant failed to obtain financing and defaulted on the agreement, the plaintiffs took steps to re-list the property and eventually sold it for a significantly lower price. The defendant claimed that the plaintiffs had not done enough to mitigate their losses, arguing that they had rejected a subsequent offer at a reduced price. The court, however, ruled in favour of the plaintiffs, finding that their decision to re-list the property was reasonable and that they were under no obligation to entertain unreasonably low offers from the defaulting buyer. Justice Corthorn held “the defendant shall pay to the plaintiffs damages in the amount of $366,513 arising from the defendant’s breach of the Agreement.”
This decision emphasizes that mitigation efforts must be reasonable but not exhaustive, and places the burden of proof on the party alleging failure to mitigate, to present compelling evidence.
These cases collectively illustrate that, while employees must take reasonable steps to mitigate their damages, they are not required to accept unsuitable positions or make unreasonable compromises. Employers, by contrast, must substantiate their claims of insufficient mitigation with concrete evidence, ensuring a fair and balanced approach to resolving disputes.
The concept of mitigation of damages is a pillar of Ontario employment law, ensuring that both employees and employers act reasonably in the aftermath of a dismissal. For employees, actively seeking comparable employment and maintaining thorough records of their job search efforts are essential to fulfilling their legal obligations and protecting their rights. For employers, providing clear evidence of an employee’s failure to mitigate is crucial in reducing potential liability. By understanding and adhering to these principles, both parties can navigate wrongful dismissal claims more effectively.