When you lose your job and are pursuing a claim for wrongful dismissal, you will hear reference to your duty to mitigate.
It often comes as a complete surprise to employees that their former employer is entitled to know about – and entitled to a credit for – an employee’s post-dismissal employment income. But this is a very important concept for dismissed employees to understand. Mitigating your damages (or failing to do so) can easily be the difference between a $100,000 case and a $10,000 case.
A wrongful dismissal claim is a claim for damages which flow from your employer’s failure to provide you with sufficient notice that your job was coming to an end. Your damages are normally calculated based on the loss in remuneration you incur over the course of a reasonable notice period.
Damages are something that you may or may not incur after your employment is terminated, and that depends mainly on when you find a new job. In many cases, it is possible for you to have some degree of control over your damages, because you can try to find a new job. Because that power is yours, the courts expect you to do your best to try to minimize (or “mitigate”) the damages which you are demanding the employer to pay.
Reasonably attempting to mitigate your damages means searching for a new job – a job for which you are reasonably suited (similar field, pay, commute time, skill level, etc). You do not have to apply for jobs for which you are unsuited, nor are you required to turn your life upside-down by applying for every single job which you come across – you simply need to make reasonable efforts. Of course, despite your best efforts, you may not be successful in your job search. The duty to mitigate does not penalize employees for having a hard time finding a new job; it just requires them to try.
Once you find a new job, your damages in wrongful dismissal may be “capped” (or partially capped) because you have decreased your damages and started earning income. And if you are not able to show that you have acted reasonably to try to find a new job, you may not be entitled to any damages at all – this is called failing to mitigate your damages. Similarly, if you are offered a new job and turn it down, you may be disentitled to any damages beyond the date that the job you declined would have started. In essence, if your post-dismissal damages are partly your fault, you can’t turn to your employer for compensation in full.
Employees engaged in a wrongful dismissal dispute ought to act reasonably to try to mitigate their damages and keep track of all attempts to do so. That includes keeping records of all job applications, internet searches, interviews, and a log of when you took other steps to search for work.
In rare circumstances, a new job might offset your severance entitlement so much that an employer’s original offer to you might become more than you’re entitled to. This could even cause the employer to rescind an original severance offer in cases where well-paying new employment was secured very quickly.
The duty to mitigate is an important part of wrongful dismissal cases and certainly one of the most misunderstood by employees.
If you find yourself out of work and faced with decisions about mitigating your losses, you should speak with an experienced, local employment lawyer to learn more about your options.
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