Can Employers Pay Less Severance If Employees Fail To Mitigate?

• Published date: 16 June 2023
• Subject Matter: Employment and HR, Employment Litigation/ Tribunals, Employee Rights/ Labour Relations
• Law Firm: Loopstra Nixon LLP
• Author: Mr Elliot Saccucci, Tahir Khorasanee and Lauren Tzogas

Successfully proving employees' failure to mitigate can save companies considerable amounts of money. The employer receives a dollar-for-dollar credit for income earned during the notice period, or income which could have been earned had the employee acted reasonably. However, failure to mitigate is difficult to prove because the duty is generally misunderstood.

As a result:

• Employers should thoroughly analyze an employee's mitigation efforts; and

• Employers should proactively participate in the employee's job search efforts.

An employee's duty to mitigate is not a duty owed to an employer, but rather a duty the employee owes to themself, to conduct themself like a reasonable person and take the necessary steps to find alternate, comparable employment once dismissed.

Lake v. La Presse (2022 ONCA 742)

The Court of Appeal's recent decision in Lake v. La Presse (2022 ONCA 742) renewed the debate regarding an employee's duty to mitigate. In this case, Ms. Lake, the general manager of an online French newspaper, and the most senior employee in the company's Toronto division, was dismissed without cause after 5 ' years. She was 52 years old and earning $185,000/year.

The Ontario Superior Court of Justice reduced Ms. Lake's notice period by two months, after she became despondent with the fruitless job search process and simply stopped applying. The Court relied on Gingerich v. Kobe Sportswear Inc., (2008) CanLII 2749 (ON SC), where the employee's refusal to lower their job search expectations constituted a failure to mitigate.¹This same view was echoed in Neilipovitz v. ICI Paints (Canada) Inc., ([2002] O.T.C. 371 (S.C.J.)) at para. 25:

"the employee must at some point lower her sights and aspirations and either take a lesser paying job or attempt to use her managerial skills in a perhaps unrelated industry".²

The Court of Appeal rejected this finding, reinstating Lake's original notice period, confirming that a failure to accept any job did not constitute a failure to mitigate as the employee was entitled to find comparable employment. In addition, there was no evidence to support the inference that she would have eventually find comparable employment had she kept applying.

What Does This Mean for Employers?

While it is not mandatory for employers to furnish evidence of alternate, comparable job openings to reduce the damages award, that remains the best way to discharge the employer's burden.

Here are a few additional cases to consider:

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