Canadian HR Reporter

C O L U M N S 48 www.hrreporter.com T O U G H E S T H R Q U E S T I O N Have a particularly difficult or interesting question? Why not share it with us? Email: sarah.dobson@keymedia.com Have a question? WHAT DOES MITIGATION AFTER DISMISSAL MEAN? Q What exactly is mitigation and what does it mean for both employers and employees? A If there is one thing that counsel for both employers and employees have in common in wrongful or constructive dismissal claims it is that both believe mitigation can be used to their advantage. But the concept of "mitigation" is often misunderstood. The idea of mitigation is based on both fairness and common sense: If a former employee claims that they should be paid during a period of common law notice, they should be obligated to take reasonable steps to "mitigate" the potential damages by searching for alternate employment that could reduce them. An employee should not be able to recover losses that could have been reasonably avoided. This sentiment was summarized by the Federal Court of Appeal in 1994 in Redpath Industries Ltd. v. Cisco: "The court must make sure that the victim is compensated for his loss, but it must at the same time make sure that the wrongdoer is not abused." How does it work in practice? To start, if an e m p l o y m e n t a g r e e m e n t h a s a fi x e d termination payment that does not include the obligation to mitigate, that obligation isn't necessarily inferred. The reasoning is that if the parties wanted to include a reduction to the amounts paid on termination, it should be clear in the agreement. Similarly, if an employer terminates a fixed-term contract early, it may be obligated to pay the employee to the end of the term unless the contract explicitly includes a mitigation obligation. Finally, agreements that provide only minimum employment standards would not be subject to mitigation since a terminated employee cannot receive less than statutory requirements. While courts have discretion to offset damages based on mitigation, they will not generally require an employee to take any job. Potential new work must be reasonable — a former CEO doesn't have to "flip burgers" to mitigate damages. But if available work is deemed reasonable or consistent with their skill set, then not accepting it might be a failure to mitigate. While the dismissed employee has the onus of demonstrating a loss from dismissal, it is the employer who must show that mitigation was possible. In assessing the reasonableness of the employee's mitigation efforts, courts may take several factors into account — such as the availability of work in a particular geographic area, the employee's age and whether the employee has the financial resources to reduce the damages. In short, the employer must show that the employee failed to take reasonable steps to find a comparable position. For construc tive dismissal, there are subtle ties in applying the concept of mitigation, which may require that the employee continue to work despite a change to a fundamental term of employment. This assessment includes consideration of whether a "reasonable person" would continue working and then claim damages. Factors such as the actual change to the employment, whether staying would be humiliating or if the workplace was toxic would be considered in determining if quitting was a failure to mitigate. Each are specific to the facts of the case. In practice, a court would assess the case and de termine the period of reasonable notice with any employment income from o t h e r s o u r c e s d u r i n g t h e n o t i c e period deducted. Lawyers understand the necessity of explaining to dismissed employees the obligation to not only make reasonable efforts to mitigate any damages but also to document such efforts. Similarly, employer counsel often keep close track on employee attempts to mitigate, ask for information on their search for alternate employment and may even use social media or evidence of available work to demonstrate that deductions from damages should be made. Ultimately, it's all about making a better pitch for damages. Although it can result in a bit of gamesmanship — who can provide enough evidence to either decrease or increase the damages — it's an important and fundamental part of the law of wrongful dismissal. CHRR Employees who are terminated without cause are entitled to reasonable notice — or pay in lieu — but that doesn't mean they're not obligated to look for new work during that period. Lorenzo Lisi of Aird & Berlis explains the concept of mitigation of damages from dismissal Lorenzo Lisi partner and leader of the Workplace Law Group at Aird & Berlis in Toronto

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