Mitigation 101
If you’ve experienced a termination – either as an employer or an employee – then you’re likely familiar with the common law concept of mitigation. If this concept is new to you, fear not! This blog is a great starting point on the topic and reviews the most recent case law in Ontario.
What is the Duty to Mitigate?
In Ontario, employees are entitled to reasonable notice of termination or payment in lieu of such notice when they are terminated without cause. This notice (or pay in lieu) is meant to bridge the terminated employee between their old job and finding a new one. However, terminated employees are required to mitigate their damages during this period (with certain exceptions).
In practice, this means that the terminated employee must make “reasonable efforts” to find (and accept) “comparable”, alternative employment. In effect, their obligation is to try to minimize their own damages by finding new work.
If an employee begins a new job during the reasonable notice period, the income earned from new employment is set off against their entitlement to notice (or pay in lieu) from their previous employer on a dollar-for-dollar basis (again, with certain exceptions). If the employee does not take reasonable steps to find comparable employment (the onus lies with the employer to show this), a court could also reduce the entitlement to notice (or pay in lieu) for a failure to mitigate.
The reasonableness of the efforts, decision-making and employer’s role in this process often comes as a surprise to both the employees and employers involved.
What are “Reasonable” Efforts?
Considerations for Employers
It is up to the employer to demonstrate that an employee failed to take reasonable steps to find comparable employment (vs. the employee showing that their steps were reasonable). In order to do this, the employer must prove both:
the dismissed employee failed to take reasonable steps to search for new work; and
had the dismissed employee taken such steps, they would have found a new job.
In demonstrating the above, employers will typically focus on the types of jobs the employee applied to (and whether they reflect the employee’s skillset), the number of jobs applied to and the resources the employee used to pursue their search. The employer cannot simply say that the efforts were substandard – they must demonstrate the lack of reasonableness through evidence.
Considerations for Employees
There’s no magic formula to assess the reasonableness of one’s efforts, and what is considered reasonable will vary depending on several factors. An administrator may meet the standard by simply applying to positions posted online, while someone in a specialized or senior role may only be able to apply to a few roles online and rely on non-traditional job search efforts to demonstrate reasonableness. Despite this, the courts have consistently confirmed two important concepts about how the reasonableness of one’s job search will be assessed:
A dismissed employee isn’t obligated to accept any new job – it must be comparable. What is comparable is typically assessed on a few different factors (location, nature of the job, compensation, etc.) and will vary from person to person.
The standard of perfection is not required when searching for a new job. Instead, the duty to mitigate requires the dismissed employee to take such steps as a reasonable person in their position would take.
One recent decision provides important, real-world insight into what reasonable efforts to mitigate might look like today.
Lake v La Presse, 2022 ONCA 742
In this case, the Court of Appeal of Ontario set aside the trial judge’s decision (Lake v La Presse, 2021 ONSC 3606), which had reduced the dismissed employee’s reasonable notice period from 8 months to 6 months due to insufficient mitigation efforts.
Both courts reviewed the dismissed employee’s mitigation records but reached different conclusions on the reasonableness of her efforts. The dismissed employee’s efforts included:
11-20 job applications;
almost daily online job searches (including relevant keywords);
networking calls/meetings and conference attendance;
use of the career transition services provided by her former employer; and
private additional career coaching.
In reaching their conclusion that the dismissed employee failed to take reasonable steps to mitigate her damages, the trial judge focused on three main factors:
the dismissed employee waited too long to start her job search after being terminated (approx. 2 months post-termination);
she should have broadened her search to lesser-paying jobs when she struggled to become re-employed; and
the dismissed employee “aimed too high” in applying primarily for jobs at the vice president level (which was more senior than her previous role).
In addition to these factors, the trial judge made some important deductions. Specifically, had the dismissed employee applied for jobs at her previous level and had she started her job search immediately, she would have been more likely to find other work and mitigate her damages. Accordingly, the trial judge reduced the dismissed employee’s assessed notice period for her failure to take reasonable steps to find comparable new employment.
The Court of Appeal reversed the trial judge’s decision and did not apply a reduction to the dismissed employee’s notice period. They found that the trial judge made two errors in reaching their conclusion that the dismissed employee failed to take reasonable efforts to mitigate:
there was no obligation for the dismissed employee to search and apply for lesser-paying jobs; and
the dismissed employee had not “aimed too high” in applying for vice-president jobs.
The trial judge focused too much on the title of the roles the employee had applied for, rather than the job description, which was more indicative of whether the positions were truly comparable.
It’s worth noting that the Court of Appeal found that the trial judge did not err in finding that the dismissed employee unreasonably delayed the start of their job search.
This appeal decision suggests that, at least for more senior employees, reasonable efforts to mitigate include more than just applying for roles. It includes networking and taking the time to search for, consider and understand the available roles. Similarly, a job title is not the only relevant consideration in determining what “comparable” employment is. An analysis of the job description, duties, salary and other benefits is key to this determination.
The Importance of Mitigation Resources for Employers and Employees
While it may be time-consuming to support an employee’s job search, employers will benefit directly if the dismissed employee secures a new job. Early mitigation means negotiating a settlement will be easier and, if a settlement can’t be reached and the matter moves to a motion for summary judgment or a trial, the damage at stake will be lower.
Once the job-search resources are provided to the employee, it is up to the employee to use them. A failure to use them will support an employer’s position that the employee’s damages should be reduced. Actual use means the employee will likely meet the very low threshold of reasonableness.
Employers should keep in mind however that timing is important. Generally, a court will only give weight to resources that were actually shared with the dismissed employee at a time when they would have been useful – i.e. when the job posting was active vs. after the end of the notice period. In the recent example of Summers v Oz Optics Limited, 2022 ONSC 6225, the employer argued that the dismissed employee had failed to mitigate his damages and presented several available job postings at trial to support this. The court ultimately disagreed with the employer and a key factor was that the employer only presented the jobs at trial and not before.
It’s also worth pointing out that the court criticized the employer in Summers for not taking any steps to help the dismissed employee find new employment. The most common ways an employer can assist with the mitigation process (and help its negotiating position) are to:
1. Send Timely, Regular Job Postings Charts
Employers should consider monitoring the job market and sending dismissed employees relevant and truly comparable job postings at regular intervals.
2. Provide Outplacement/Career Transition Services
Employers should also consider providing outplacement or career transitioning counselling services as part of their termination packages – especially for long-service employees who may need guidance on current job searching trends or resume writing.
3. Write a Reference Letter and Provide Assurances Regarding Verbal References
Employers are often reluctant to provide terminated employees with reference letters. We get it – it can feel disingenuous in certain circumstances. However, employers should keep in mind that failing to provide a reference or employment letter could negatively impact the individual’s ability to apply for new jobs, and accordingly cost the employer more money down the line. While the letter doesn’t need to be a glowing recommendation if the employee’s performance was not adequate, a simple letter confirming the tenure, job title, responsibilities, any accomplishments, and a neutral reason for their departure can go a long way.
An employer should also identify a point person for any reference checks and reiterate to the dismissed employee that this person will respond to inquiries consistent with the letter (or confirm their neutral reference check process). Not only does this provide reassurance to the employee, but it also takes away their argument that they couldn’t look for work because they didn’t have information about a reference.
Key Takeaways for Employees:
Start your job search ASAP.
Keep detailed records of your search efforts and utilize all resources available to you.
Document non-traditional efforts (networking, attending a course, reviewing job sites, LinkedIn training/status updates, etc.).
Key Takeaways for Employers:
Ask for regular updates from the dismissed employee (or their lawyer) about their job status and search efforts.
Conduct searches and compile job postings for terminated employees that focus on comparable positions and share them in real-time.
Provide resources to dismissed employees for job searches when possible (and check in on whether they’ve used them).
