Wrongful Dismissal: Think About Mitigation
1. Employee may have duties event if she is wrongfully dismissed
In Alberta, when an employer dismisses an employee without cause, the employee may be entitled to damages for wrongful dismissal. This may be the case where the employer terminates the employment without notice or with insufficient notice. While the employee may be entitled to considerable damages award as a result of such employer’s behaviour, these damages may be significantly reduced.
The reason for this comes from the way we calculate the employee’s entitlement to damages for wrongful dismissal. Specifically, there are three steps in the calculation. First, we determine the employee’s reasonable notice period. Whether the termination notice period is reasonable depends on a number of factors, which I touched upon here. Second, we calculate damages the employee suffered during the reasonable notice period. Here, we estimate what the employee would have earned, had she continued working within the period of reasonable notice. Third, we look at the employee’s mitigation efforts and at the results of these efforts. If the employee’s mitigation efforts are insufficient, we may have to reduce the employee’s entitlement to damages for wrongful dismissal.
So, what is mitigation?
2. Mitigation means efforts to reduce damages
In the context of employment law, mitigation means that the employee should attempt to maintain her income and career during the reasonable notice period. The rationale for this legal rule is that the termination notice serves as a temporary cushion for the employee. It is not a reward for the employee’s past loyalty or punishment for the employer. If the notice is just a temporary cushion, the duty to mitigate motivates the employee to be proactive.
3. Mitigation requires reasonable efforts – not the best efforts
The general rule is that the employee has to take steps to find alternative employment. However, the employee does not have to take any survival job. She only has to take sufficient (aka reasonable) steps to find employment comparable to her former work. In other words, the employee’s mitigation efforts can be sufficient even if the employee fails to secure a new position.
As it is often the case in law, there is no single answer to what constitutes reasonable mitigation efforts. Considering the steps sufficient for the employee, we look at her specific circumstances. Then we compare her efforts with the steps a virtual “reasonable” person in the employee’s circumstances would take to maintain her income and career during the reasonable notice period. Would that virtual person constantly apply for alternative employment, move to a new area with better market conditions, take courses to upgrade her skills or even accept new offer from her previous employer? Again, we are not looking for the best steps of a perfect person in ideal situation here – we are only thinking about sufficient steps an ordinary individual would take in similar circumstances to protect her interest.
4. What if the employee makes reasonable efforts to mitigate?
The answer to this question depends on the results of the employee’s mitigation efforts and on the employer’s position. In the best case scenario, the employer does not challenge the employee’s entitlement to damages and the employee finds new work relatively quickly within the reasonable notice period. Then, the employee may save some portion of the damages award and use it for her benefit. If the employee is lucky to find new work within reasonable notice period, but the employer challenges the employee’s entitlement to damages, the court may reduce the employee’s damages by the amount of her income from new employment received during the reasonable notice period.
On the other hand, if the employee makes reasonable efforts to mitigate but cannot secure new employment during the reasonable notice period, the court will unlikely reduce the employee’s entitlement to damages from wrongful dismissal but most portion thereof will likely be spent by the employee on her day-to-day expenses.
5. What if the employee does not mitigate?
Employee’s failure to mitigate is a good cause for the former employer to challenge the amount of damages they are required to pay in a wrongful dismissal action. It is not that easy for the employer to prove the employee’s failure to mitigate damages since they have to bring evidence that the employee was not proactive enough while there were employment opportunities available. However, if the employer succeeds, the court may reduce the employees entitlement to damages from wrongful dismissal.
6. Proving mitigation efforts
In light of the issues discussed above, the employee has to be proactive to protect her entitlement to damages for wrongful dismissal. She may want to think about new career prospects, relocation or education opportunities. More importantly, the employee has to prepare to the employer’s possible attacks and keep track of her mitigation efforts. For example, she may want to document her job search, her feeling of the market conditions and results of her interview and networking meetings.
In this article I touched upon some general rules of mitigation. As it is often the case in law, there are lots of specific rules, limitations and exclusions. Discuss your situation with the lawyer to protect your interests as much as possible.
The content of this article is intended to provide a general guide to the subject matter and should not be considered as legal or other professional advice. To get detailed information regarding your specific circumstances, please discuss your situation with the author or another lawyer.