[This article originally appeared in the July 8, 2016 issue of The Lawyers Weekly]
Mitigation can be difficult, especially if this is the first time a client is going through the process, whether it be an employee or an employer. Even once your client understands the concept, it can be hard for them to maintain mitigation, as it is an ongoing issue until the claim is resolved.
When an employer terminates an employee, the employee normally has a duty, imposed by common law, to make reasonable efforts to mitigate his or her damages. This means making a reasonable effort to find comparable, alternative employment.
If alternative employment is obtained, money earned during the notice period may be subtracted from the ultimate notice period. If the employee fails to mitigate, there may be a reduction of the overall judgment or settlement.
Below are some tips for advising a client.
Employer client tips
- Employers bear the onus of demonstrating that the employee failed to make reasonable efforts to mitigate. Judges are hesitant to reduce the notice period of an employee without solid evidence the employee could have mitigated earlier. Therefore, having one job posting that the employee failed to apply for is not sufficient. To really prove the employee could have obtained alternate employment at an earlier date, it is important for an employer to keep an eye on job postings throughout the notice period. But be careful not to include jobs that are much lower paying, in a far location, or below the skill level of the employee. This will not be viewed as reasonable alternate employment.
- Is it reasonable to offer them another position with your client? Another way to trigger the failure to mitigate is for the employer to offer alternate employment. This will depend on the employment and the manner in which the previous employment was terminated. Any embarrassment or humiliation that occurred during the employment or termination (did you escort the person from the premises? How was the termination meeting handled?) will mean that it is not reasonable to expect the employee to return. This option is best suited to employees who are being laid off through no fault of their own. It is even better if the employer offers the alternate employment at the time it notifies the employee that their position is ending. But even if the offer is made early, the terms and conditions of the new position (pay, location, responsibilities) must truly be reasonable alternate employment.
- A written employment agreement may limit the duty to mitigate. Where the employment contract sets out a defined notice period or severance payment, the principles of mitigation are unlikely to apply. This also has implications for a term contract. Unless there is a termination clause, the employee may be entitled to receive pay for the remainder of the time left on the term of the contract. Also, unlike the common law, mitigation does not apply to the notice and severance payments outlined in the Employment Standards Act, 2000 (“ESA”). These are amounts that the employee is entitled to regardless of any employment contract, or lack thereof, and regardless of any other job obtained by the employee during the ESA notice and severance period.
Employee client tips
- Your client has to take reasonable steps. While an employee has a duty to mitigate, they are not required to accept a much lower-paying alternative position, nor employment below their level of skill. What will qualify as a “reasonable effort” to mitigate depends on the facts of each case. Employees also have no duty to mitigate when they are totally incapable of working, such as when they are receiving disability benefits. It is important to remind employee clients that mitigation is an ongoing duty. It may be found that the employee made reasonable efforts for some, but not all, of the notice period.
- Have your client keep copies of jobs they applied for and copies of the application. It is not uncommon for employees to take reasonable steps to mitigate, but they can’t remember all the steps they have taken, especially as the time to prove those mitigation efforts often comes months (or even years) after the fact. If the employer is able to provide 50 potential alternate employment positions, an answer of “I think I applied for some of those” is not going to impress.
- Have your client keep a job search journal, including details such as: Copies of all job searches on any online database; copies of any jobs applied to; copies of any applications; copies of all inquiries (including phone and in person); copies of any responses received (including phone and in person); detailed list of all the interviews attended.
In a wrongful dismissal action, employees can seek credit for out-of-pocket expenses incurred in a job search. Tell your clients to keep records of these expenses, including postage and photocopying expenses. These expenses can also include costs to establish self-employment. Further, this reimbursement will come to you without deductions. But, be reasonable. Was that laptop really necessary to your job search? Judges will not look kindly on inflated claims.
Alison McEwen is an associate lawyer with the Ottawa law firm of Nelligan O’Brien Payne LLP (www.nelligan.ca) and a member of the Labour, Employment and Litigation Law Groups.
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