What is the duty to mitigate and am I obliged to mitigate during the COVID-19 pandemic?
In Ontario, entitlements upon termination arise from two sources: The Employment Standards Act (ESA), which lays out the minimum standards in employment relationships, and the common law. Over time, the law has developed such that, if you agree to be bound by the minimum entitlements in your employment contract, you may only receive those minimum entitlements if terminated.
However, if your employment contract did not set out your minimum entitlements then the common law governs, and you may be entitled to more than the minimum standards set out in the ESA. The law is strict when it comes to scrutinizing employment contracts to determine if you are only entitled to the legislative minimum standards. If the minimum standards are set out in your contract, they dictate your entitlements; if not, the common law analysis of reasonable notice is applied.
An interesting consideration comes into play when mitigation is addressed. Under the ESA, an employee is entitled at law to termination pay, and if qualifying, severance pay, the latter without any obligation on the employee. These are the entitlements at law and they cannot be contracted out of or denied through a post-termination act of the employee. This means that a terminated employee is entitled to a full payment of all statutory monies owed even if they immediately find new employment or take no steps to find alternate employment.
At common law, mitigation comes into play. It is important to note that an employee is never required at law to mitigate. A judicial determination of the reasonable notice period you are entitled to at common law does not include a consideration of mitigation. However, in practice, mitigation plays an important role in the amount of damages the court will award in response to the determination of the notice period, which may be reduced upon a finding that there was a failure to mitigate. Where an employee fails to mitigate the consequences can be severe, even if the employee has a good prima facie case. In this regard, the duty to mitigate is sometimes considered a duty that you owe to yourself, in that it preserves your entitlements to monies awarded by the Court. If you properly mitigate, the Courts may award damages for the total of the notice period that has been determined; if you do not mitigate, the court may award damages for less than the total notice period.
Given that mitigation is beneficial, what does it mean? Mitigation in the termination of employment context means that the terminated individual has to make reasonable efforts to secure new employment. This means taking such steps as updating your resume, applying for postings, reaching out to contacts in the industry, or meeting with a career counselor. Mitigation is an individualized process and your circumstances such as age, seniority and type of employment are considered when evaluating your efforts, as are external factors such as the job climate and competitiveness of industry. It may mean accepting a new position that, based on these factors, seems reasonable.
While the employee is the person performing the mitigating tasks, if the employer chooses to argue failure to mitigate then the employer bears the burden of proving such failure. Here, the standard is reasonableness. If the employer is successful, then the adjudicating official may reduce the employee’s damages in an amount that correlates to what they could have earned if successful in their efforts, or eliminate damages entirely. The analysis into efforts to mitigate is evidence based, so keeping track of your job hunt is crucial.
It is worth noting that the COVID-19 pandemic is expected to have an effect in how courts will decide whether you have met your duty to mitigate. While there is yet to be a judicial determination, it is reasonable to expect that the courts will recognize that there should be a significantly lower expectation that you, despite reasonable efforts, will be able to secure new employment in the context of the pandemic. It remains to be seen if, given the mass layoffs and business closures caused by COVID-19, courts will lengthen notice periods to compensate for a job climate that is expected to have very negative effects on any mitigation efforts you may make.
Mitigation is not a clear-cut process, but rather a contextual analysis of a variety of factors and circumstances. It is helpful to contact an experienced employment lawyer to discuss one’s duties to mitigate to ensure that you retain your full entitlements at common law. Learn More.