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A Dismissed Employee’s Duty to Mitigate

By
Erin Gellhaus
Date
February 16, 2022

A Dismissed Employee’s Duty to Mitigate

When an employee is terminated without cause, an employer is obligated to provide the employee with notice. The amount of notice is dependent on multiple factors, including the tenure of the employee and whether there is an employment contract in place that sets out a period. At the very minimum, the amount of notice must meet the periods set out in Alberta’s Employment Standards Code.

In providing notice, employers have the option to provide an employee with either reasonable working notice of their employment coming to an end or alternatively providing them a payment in lieu thereof, often referred to as a severance package.

A common misconception is that a severance package is meant to reward an employee for past service or punish the employer for dismissing the employee in the first place. Both of these assumptions are incorrect. The purpose of a reasonable notice period is to provide the dismissed employee with time to find new work. It is meant to put the employee back into the same position that they would have been in but for the termination.  

The Duty to Mitigate

In civil litigation, the courts have determined there is “duty to mitigate” whereby a plaintiff who has suffered a loss as a result of a defendant’s conduct, has a legal obligation to take reasonable steps to alleviate that loss. In the context of employment law, the duty to mitigate requires the dismissed employee to take reasonable steps to find new employment. This duty commences at the date of termination, however Courts have recognized that employees need time to collect themselves after learning their employment has been terminated. It may be reasonable for dismissed employees to take a few weeks to adjust to the shock of termination, as well as time to prepare job application materials.

In fulfilling the duty to mitigate, the dismissed employee does not need to accept any other job. They are only required to apply for jobs that are “reasonably similar” to the position they were terminated from. The new employment should be comparable to their previous position in regards to status, pay, duties and responsibilities, career potential, permanence, and required skill set. If an employee can prove that they took reasonable steps throughout the notice period, yet have still not found comparable employment, their claim against the employer will remain intact. If a dismissed employee fails to take reasonable steps to find comparable employment, an employer may be able to successfully argue a reduced amount of damages awarded to the employee.

It is up to the employer to prove that the employee did not mitigate. This is a difficult bar to meet. The employer must prove two things. First, the employer must demonstrate that the employee’s efforts to mitigate were unreasonable in all aspects. The employer must then show that had the employee acted reasonably, they would have secured a comparable position. Employers are held to a very high standard, particularly at the second stage of this analysis.

The experienced employment lawyers at Getz Collins and Associates know the potential consequences an employee failing to mitigate their damages and the impact it can have in a claim for wrongful dismissal. Our lawyers are prepared to advise and advocate for employers and employees on any matter relating to claims for wrongful dismissal.

Author: Erin Gellhaus


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