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Mitigation
Mitigation is a basic principle of contract law that figures prominently into many employment law cases. Under this doctrine, a dismissed employee has to take all reasonable steps to minimize any losses they have suffered. Generally, this means that an employee who has been dismissed must look for another position instead of simply sitting back and allowing their losses to accumulate.
Mitigation usually impacts employment law cases in one of two ways:
If the employee finds new employment during the notice period, any money earned from the new job will be deducted from the total amount of damages owed by the former employer. Usually, we refer to this scenario by stating that the employee has mitigated his or her losses.
In the second scenario, an employee has not taken reasonable steps to find another job and the court may reduce that employee’s damages at trial considering that had the employee looked hard enough, he or she could have found another job.
It is important to note that the standard of mitigation is viewed as being favourable to the employee. For instance, in the leading Canadian case of Red Deer College v. Michaels, the Supreme Court of Canada determined that the employee’s obligation to mitigate means that he or she need only to make reasonable efforts and is not required to accept the first available job offer or a lesser position. I have also written about mitigation here.
Constructively dismissed employees also have an obligation to mitigate. In the leading case, Mifsud v. MacMillan Bathurst Inc., the job description of a plant superintendent was changed to a foreman. Facing a demotion in responsibilities, the employee refused to accept the new position. Although the court found the employee was constructively dismissed, it also stated that the employee failed to make reasonable efforts to mitigate by not remaining at the workplace. The court found that, where the salary is the same, the work conditions are not substantially different or demeaning, and the personal relationships are not hostile, it would be reasonable to expect the employee to remain in his or her altered position, instead of leaving the job and suing for constructive dismissal.
The Supreme Court of Canada has also recently said that, sometimes, employees who have been dismissed may have an obligation to return to the workplace, if their employer requests that they come back. I have recently published an article about this case, which can be read here.
Read our employment law articles about mitigation for more information.