What does “mitigation” mean in the context of employment dismissal?

When an employee is dismissed, often the first thing on their mind is how and where they will start earning a comparable income. Dismissed employees might have heard the word “mitigation” from their employer, or even an employment lawyer. Mitigation in the employment world means taking reasonable steps to search for comparable employment. What will be considered ‘reasonable’ and ‘comparable’ will depend on the circumstances, as detailed further below.

Dismissed employees who are seeking an improved severance package from their employer are expected to mitigate or take steps to search for comparable employment. These employees will need to carefully consider the impacts of mitigation on their claim. On the one hand, any income earned by a dismissed employee during their notice period could be deducted from their severance entitlements.  On the other hand, a failure to make reasonable efforts to mitigate your damages could result in a deduction in the amount of notice you are entitled to.

What will be considered mitigation earnings will also depend on the circumstances. Generally, an employee that had a second job during their tenure will not need to consider that continued income as mitigation, unless the income increases significantly after the dismissal. Thus, most likely this income would not be deducted from the notice period. Typically, reemploying in a new position earning steady income will generally be considered mitigation income.

How is self-employment viewed in terms of mitigation?

Following a dismissal, many employees may consider starting their own business rather than reemploying elsewhere. Self-employment income earned during the notice period is not always as straightforward, because it will often take quite some time to generate any significant amount of income.

Typically, given the variability in startup costs and delayed earnings, the courts view self-employment as a second option for mitigation, rather than the primary goal of obtaining permanent employment elsewhere. While self-employment may not always be a viable option to demonstrate mitigation, an employee will have a stronger claim if they can demonstrate that the venture relates to their job experience and skillset, and that the business was started after or alongside a genuine job search.

How can Whitten & Lublin assist employees in understanding their employment rights?

To better understand your employment rights, we encourage employees to seek legal advice. We at Whitten & Lublin are happy to provide insight and advice into your specific circumstances. If you are looking for employment lawyers and would like more information about what Whitten & Lublin can do for you, please contact us online or by phone at (416) 640-2667 today.

Author – Rachel Patten