When an employee is dismissed, the common law grants them notice or pay in lieu to provide financial support while they search for new work. However, notice is not meant to be a windfall. Employees are expected to take reasonable steps to “mitigate” their losses by pursuing comparable employment, while employers bear the burden of proving that suitable jobs were available and that the employee failed to pursue them.
Recent decisions across Canada highlight that, although mitigation remains a two-way street, courts have become increasingly sympathetic to employees and more demanding of employers. Having explored many of these cases individually in earlier blogs, this piece connects them to illustrate how the duty to mitigate is evolving.
Employee Obligations: Reasonable Efforts to Mitigate
One recent Ontario Superior Court of Justice (“ONSC”) decision, Kondaj v Crossbridge Condominium Services Ltd., confirmed that courts reward employees’ genuine mitigation attempts. The employee, a 42-year-old with less than four years of service, notably received 10 months’ notice—longer than might typically be expected. A deciding factor was her documented applications to more than 170 positions over 11 months, demonstrating persistent, if unsuccessful, efforts to secure comparable work. In this case, the ONSC rewarded her job search efforts by extending her notice period to reflect the longer re-employment period, supporting the notion that notice is intended to provide a financial bridge during the transition period.
Canadian courts have further supported employees in the mitigation context by confirming that the duty to mitigate does not oblige employees to accept roles that are unilaterally altered or diminished. In Nickles v 628810 Alberta Ltd. [Nickles], the Alberta Court of King’s Bench of (“ABKB”) considered whether an employee was obliged to accept the employer’s proposal to return on a part-time basis rather than in her full-time role. The ABKB rejected this argument, holding that mitigation requires reasonableness, not acquiescence to reduced or unilaterally imposed terms.
Employer Obligations: Evidentiary Burden and Best Practices
For employers, the bar has risen. Courts expect more than assertions that an employee failed to mitigate; they expect proof. In Pateman v Koolatron Corporation, the Ontario Court of Appeal made clear that employers must prove both that: (1) the employee failed to take reasonable steps to mitigate, and (2) if reasonable steps were taken, the employee would have been expected to secure a comparable position.
Similarly, in Carroll v Oracle Canada ULC, the ONSC found that simply pointing to “internal opportunities” without specifics was insufficient evidence to prove that an employee failed to mitigate. Interestingly, the ONSC went further by considering the quality of a reference letter as part of the mitigation analysis. The ONSC determined the employer’s bare-bones confirmation of employment likely hampered the job search of an employee who was known to be an “overachiever”, thereby weakening its mitigation argument.
By contrast, employers who present detailed and persuasive evidence can succeed. In Brown v General Electric Canada et al, the Manitoba Court of King’s Bench (“MBKB”) found that an employee failed to mitigate his damages in the context of the sale of the employer company. The employee had rejected the purchaser’s offer, which provided nearly identical terms of continued employment. Because the employer produced detailed records, including emails, reassurances, and amended offer letters, the MBKB concluded that the employee had unreasonably refused comparable employment, and denied the employee’s claim for 24 months’ pay in lieu of notice.
When Disclosure and Records Tip the Scale
Ultimately, mitigation often turns on evidence, and disclosure plays a central role. In Abbasbayli v Fiera Foods Company, the ONSC noted that it would have limited an employee’s recoverable notice, given the employee’s refusal to produce evidence of post-termination income and evidentiary inconsistencies regarding his claimed inability to work. Similarly, in Boyle v Salesforce.com, the ONSC reduced notice because the employee delayed producing his Notice of Assessment, though importantly, this outcome hinged on the employer presenting a clear record showing mitigation was at issue.
These cases illustrate that employers who request and preserve mitigation records strengthen their hand, while employees who are transparent and consistent protect theirs.
Conclusion
Mitigation is at the heart of wrongful dismissal law. Employees must act reasonably in their job search and in disclosing their efforts, while employers must prove when those obligations fall short. Ultimately, termination may end the employment relationship, but the duty to mitigate ensures the responsibilities—and the paper trail—continue.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.