In a wrongful dismissal action, the dismissed employee must lead evidence that he or she has suffered a financial loss (a.k.a. damages) as a result of the loss of employment. Once this is established the evidentiary burden then shifts to the employer to prove that the former employee failed to mitigate his or her damages by failing to take reasonable steps to find new employment. Proving an employee has failed to mitigate is not an easy task.

To prove a financial loss the dismissed employee will normally enter into evidence the details of his or her job search as well as inform the court whether any employment income has been earned, if any, from other sources during the notice period claimed to prove that a financial loss has been suffered. It is a simple but important component of the employee’s case because a failure to do so will be fatal. This happened in Garcia v. 1162540 Ontario Inc. (c.o.b. as Venice Fitness)1 when the Divisional Court set aside damages awarded by a small claims court judge because the plaintiff had not led evidence of a loss of income. Justice Wilton-Siegel wrote at paragraph 30 and 31:

The problem in the present case is simply that the plaintiff never testified that he was unemployed for any period of time after his dismissal. 

The level of proof required to establish lost income is not onerous.  It is not the same as the proof required to establish mitigation.  It is simply evidence that the plaintiff was not employed, or not employed at the same level of salary or wages as he was prior to the wrongful termination of his employment. 

Significantly, once the former employee has led evidence that he or she has suffered damages as result of the loss of employment the evidentiary burden shifts to the employer to prove that the former employee has failed to mitigate his or her damages. This was confirmed inMichaels v. Red Deer College2 by Chief Justice Laskin, writing for the Supreme Court of Canada, wrote at page 331:

In the ordinary course of litigation respecting wrongful dismissal, a plaintiff, in offering proof of damages, would lead evidence respecting the loss he claims to have suffered by reason of the dismis­sal. He may have obtained other employment at a lesser or greater remuneration than before and this fact would have a bearing on his damages. He may not have obtained other employment, and the question whether he has stood idly or unreasonably by, or has tried without success to obtain other employment would be part of the case on damages. If it is the defendant’s position that the plaintiff could reasonably have avoided some part of the loss claimed, it is for the defendant to carry the burden of that issue, subject to the defendant being content to allow the matter to be disposed of on the trial judge’s assessment of the plaintiff’s evidence on avoidable consequences.

Chief Justice Laskin then confirmed that the employer bears the onus of showing either that the dismissed employee “found, or by exercise of proper industry in the search, could have procured other employment of an approximately similarly kind, reasonably adapted to his abilities”. In describing the nature and extent of the employer’s burden of proving a failure to mitigate Chief Justice Laskin approved the following statement:

But the burden which lies on the defendant of proving that the plaintiff has failed in his duty to mitigate is by no means a light one, for this is a case where a party already in breach of contract demands positive action from one who is often innocent of blame.

The standard applied to a dismissed employee is reasonableness, not perfection. Moreover, any gap in the evidence accrues to the benefit of the dismissed employee.

In 1990 the Ontario Court of Appeal held in Furuheim v. Bechtel Canada Ltd.3 that an employer must show that the dismissed employee’s conduct was unreasonable, not in one respect, but in all respects in order to overcome the onus of establishing a dismissed employee’s failed to properly mitigate his or her damages.

In 2015 the Ontario Court of Appeal in Carter v. 1657593 Ontario Inc. (The Olde Angel Inn)4 reiterated that a dismissed employee is not obliged to accept employment that is not comparable to his or her former employment in order to mitigate his or her damages.

The Ontario Court of Appeal also stated in Link v. Venture Steel Inc.5 at para. 73 that the onus is on the employer to establish that the dismissed employee failed to take reasonable steps to mitigate his damages and that had he done so, he would have been expected to secure a comparable position reasonably adapted to his or her abilities.

In Christianson v. North Hill News Inc.6 the Alberta Court of Appeal held that any gap in the evidence will accrue to benefit of the plaintiff. In addition, a dismissed employee is only required to make objectively reasonable decisions when considering his or her actions in hindsight, not the best possible decision. In Christianson, at trial, the judge had found that the dismissed employee had failed to mitigate her losses and shortened a six-month notice period to two months. However, the Court of Appeal overturned the trial judge’s decision finding that the employee had properly mitigated her losses when she took a six-month retraining course, after which she quickly found a job.

The British Columbia Court of Appeal held in Forshaw v. Aluminex Extrusions Ltd.7 held that the duty to mitigate is not a duty owed by the dismissed employee to the employer to reduce the amount claimed but a duty to take reasonable steps in the dismissed employee’s own interests.  Justice Taylor, writing for the Court, stated:

That “duty”—to take reasonable steps to obtain equivalent employment elsewhere and to accept such employment if available—is not an obligation owed by the dismissed employee to the former employer to act in the employer’s interests. It would indeed be strange that such a duty would arise where an employer has breached his contractual obligation to his employee, having in mind that no duty to seek other employment lies on an employee who receives proper notice.

The duty to “act reasonably”, in seeking and accepting alternate employment, cannot be a duty to take such steps as will reduce the claim against the defaulting former employer, but must be a duty to take such steps as a reasonable person in the dismissed employee’s position would take in his own interests – to maintain his income and his position in his industry, trade or profession. The question whether or not the employee has acted reasonably must be judged in relation to his own position, and not in relation to that of the employer who has wrongfully dismissed him. The former employer cannot have any right to expect that the former employee will accept lower-paying alternate employment with doubtful prospects, and then sue for the difference between what he makes in that work and what he would have made had he received the notice to which he was entitled.

The Ontario Court of Appeal in Bowen Estate v. Ritchie Bros. Auctioneers Ltd.8 rejected the employer’s argument that the dismissed employee did not take reasonable steps to mitigate his damages when he failed to explore the possibility of working for another division of the employer. The Court, at paragraph 23, wrote:

The existence of positions in the company is uniquely within the knowledge of management. If there was a position which the company wanted Bowen to fill, it should have offered it to him in a clear fashion. A long-serving and respected employee, faced with the loss of the position he has successfully filled, should not have to wander around the employer’s premises exploring “the possibility” of a different position.

In Johnson v. Canadian Association for the Mentally Retarded 9 the employer failed to establish that the dismissed employee had not mitigated her damages. The employee admitted in cross-examination that she had not applied to several businesses. However, the employer had not led evidence that any comparable positions were available at these employers.

In Rowe v. General Electric Canada Inc.10 Justice Ferguson stated that before reducing the dismissed employee’s damages due to failure to mitigate, a judge must find that this failure caused part of the loss alleged by the employer. In other words, the employer must prove that the employee’s job search efforts, or lack thereof, directly led to the dismissed employee being unable to find new work. The judge, at paragraph 18, described the employer’s burden as follows:

…there must be direct evidence, or evidence sufficient to support an inference, that the omission of the plaintiff was causative. The evidence must prove that the plaintiff failed to take reasonable steps to mitigate the loss and that had such steps been taken they would have reduced the loss.

This reasoning was applied in Alishah v. J.D. Collins Fire Protection Co.11 the trial judge reiterated that the onus is on the employer to prove that had the dismissed employee taken reasonable steps to mitigate, he or she would have secured comparable employment. Similarly, in the 2015 decision Munoz v. Sierra Systems Group Inc.12 the trial judge wrote at para. 107:

Thus while the plaintiff took few steps to mitigate his loss in the early spring of 2014, I find there is little evidence that a suitable and comparable job existed had he looked for employment. The onus of proof rests with the employer to show that the dismissed employee has failed to mitigate his loss. Where there is no evidence that the plaintiff would otherwise have found appropriate work, there can be no reduction in the award of damages: per Burnyeat J. in [Smith v. Aker Kvaerner Canada Inc. and Kvaerner Power Inc., 2005 BCSC 117] at para. 36. The onus rests with the defendant to prove that the plaintiff failed to take steps to mitigate his loss and that those steps would likely have led to equivalent employment: Smith at paras. 32-33 and the authorities cited therein.

In Aucoin v. Liturgical Publications of Canada Ltd.13 Justice Taylor advised any employer to be prepared to lead evidence that it assisted the dismissed employee in his or her job search if it intends to argue that a dismissed employee failed to mitigate.  At paragraph 15 Taylor J. wrote:

No assistance was given by Liturgical Publications to Eric Aucoin to help him secure alternate employment. He did not receive a signed letter of reference until shortly before the trial. He was provided with no outplacement counselling. He was not told about the job opportunities found by Michael Morrissey on his searches of the Workopolis website. I am not suggesting that the employer has an obligation to provide outplacement counselling to a dismissed employee or bring job opportunities to the attention of the former employee but if an employer intends to argue the failure to mitigate on the part of the former employee, it would be well advised to present evidence of assistance that was offered to the terminated employee during his or her job search.

In the 2015 decision Drysdale v Panasonic Canada Inc.14 Justice Lederman reiterated that an employer should assist an employee with his or her job search if it intends to argue that the employee failed to mitigate writing at paras. 21 and 22:

The defendant offered the plaintiff no assistance in searching out these job postings and therefore it does not lie readily in the defendant’s mouth to criticize the plaintiff afterwards for not pursuing these specific job opportunities. As stated by Taylor J. in Maxwell v. United Rentals of Canada Inc., 2015 ONSC 2580 (CanLII) at para. 40 “… if an employer intends to argue the failure to mitigate on the part of the former employee, it would be well advised to present evidence of assistance that was offered to the terminated employee during his or her job search.” Here, the defendant raised the issue of available job postings after the fact and only in the course of this litigation. Prudence would have dictated that the employer make this information available to the employee in a timely way to assist him in his transition.

In the 2022 decision Summers v. Oz Optics Limited the employer argued that the employee had failed to take reasonable steps to mitigate his damages.  The judge responded by writing:

As there is an issue concerning an alleged failure to mitigate, discussed below, I would note that the employer seems to have done nothing to assist the [employee] in transitioning to new employment. In particular, he was terminated summarily and escorted off the premises in front of other employees. This did not allow the [employee] an opportunity two preplan his job search or to investigate alternative employment in advance of termination. The employer has not provided a letter of reference nor was any assistance offered by way of career transition counseling. The employer has not offered to waive the non-solicitation provision in the employment agreement.

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Chapter Index

  1. Garcia v. 1162540 Ontario Inc., 2013 ONSC 6574; 
  2. Red Deer College v. Michaels, 1975 CanLII 15 (SCC); 
  3. Furuheim v. Bechtel Canada Ltd.(1990), 30 C.C.E.L. 146 (Ont. C.A.); 
  4. Carter v. 1657593 Ontario Inc. (The Olde Angel Inn), 2015 ONCA 823; 
  5. Link v. Venture Steel Inc., 2010 ONCA 144; 
  6. Christianson v. North Hill News Inc., 1993 ABCA 232. 
  7. Forshaw v. Aluminex Extrusions Ltd., 39 B.C.L.R. (2d) 140, 1989 CanLII 234 (BCCA); 
  8. Bowen Estate v. Ritchie Bros. Auctioneers Ltd., 1999 O.J. No. 4102 (C.A.). 
  9. Johnson v. Canadian Association for the Mentally Retarded (1985), 37 Man. R. (2d) 12 (Q.B.). 
  10. Rowe v. General Electric Canada Inc., 1994 CanLII 7389 (ONSC); 
  11. Alishah v. J.D. Collins Fire Protection Co., 2006 O.J. No. 4634 (S.C.J.); 
  12. Munoz v. Sierra Systems Group Inc., 2015 BCSC 269; 
  13. Aucoin v. Liturgical Publications of Canada Ltd., 2009 CanLII 10667 (ONSC); 
  14. Drysdale v Panasonic Canada Inc., 2015 ONSC 6878;