The Duty to Mitigate: You Got Fired, But You Still Have to Look for Work

You Can't Just Wait for the Cheque

There's a common misconception among terminated employees that goes something like this: "I was wrongfully dismissed. My employer owes me 18 months of notice. I'm going to sit tight and collect."

That's not how it works. Canadian law imposes a duty to mitigate on every terminated employee. You are obligated to make reasonable efforts to find new, comparable employment. If you don't — or if you turn down reasonable opportunities — the court will reduce your damages accordingly.

The duty to mitigate is one of the most important and least understood principles in Canadian employment law. It can dramatically affect the amount of money you actually receive, and employers who understand it well use it as their primary defence in wrongful dismissal actions.

The Foundation: Red Deer College v. Michaels

The duty to mitigate in the employment context was established by the Supreme Court of Canada in Red Deer College v. Michaels, [1976] 2 SCR 324. The principle is borrowed from general contract law: a party who suffers a breach of contract must take reasonable steps to minimize their losses.

In the employment context, this means that a wrongfully dismissed employee must make reasonable efforts to find alternative employment. If the employee finds a new job during the reasonable notice period, their income from that new job is deducted from the damages the former employer owes. If the employee fails to look for work at all, the court can reduce the damages to reflect what the employee would have earned had they made reasonable efforts.

The key word is "reasonable." The duty to mitigate doesn't require heroic efforts. It doesn't require you to accept any job offered to you. It requires a genuine, sustained effort to find comparable employment — the kind of effort a reasonable person in your situation would make.

What Counts as "Reasonable" Efforts

Courts evaluate mitigation efforts based on the totality of the circumstances. There's no checklist that guarantees you'll be found to have mitigated properly, but the following factors are consistently considered:

- **Active job searching:** Applying for positions, networking, working with recruiters, attending job fairs. Courts want to see evidence of consistent, documented effort. Applying for two jobs in six months won't cut it.

- **Appropriate scope:** You should be looking for positions comparable to the one you lost — similar level, similar compensation, similar industry. But as time passes, courts expect you to broaden your search.

- **Geographic reasonableness:** You're generally not required to relocate, but you are expected to look within a reasonable commuting distance. What's "reasonable" depends on your industry, your market, and where you live.

- **Documentation:** Keep records. Save every job application, every email to a recruiter, every LinkedIn message. If the employer challenges your mitigation efforts — and they will — you need proof.

The standard is not perfection. Courts recognize that job searching is demoralizing, that the market fluctuates, and that not every application leads to an interview. But they expect good faith effort. The employee who spent six months "taking time for self-care" before beginning their job search will face a mitigation argument they may not survive.

The Burden of Proof Problem

Here's the wrinkle that favours employees: the burden of proving a failure to mitigate falls on the employer, not the employee. This is a critical procedural point that changes the dynamics of wrongful dismissal litigation.

The employer must demonstrate, on a balance of probabilities, that the employee failed to make reasonable efforts to find comparable employment, and that comparable employment was available. It's not enough for the employer to say "you should have looked harder." They need evidence — evidence that jobs existed, that the employee was qualified for them, and that the employee either didn't apply or unreasonably turned them down.

This is a high bar. Employers often struggle to meet it because they don't have access to the employee's job search records, and proving the existence of hypothetical opportunities requires actual market evidence, not speculation.

The Evans Controversy: Must You Go Back to the Employer Who Fired You?

No discussion of the duty to mitigate is complete without addressing the most controversial decision in this area: Evans v. Teamsters Local Union No. 31, 2008 SCC 20.

The facts were unusual. The employer terminated Mr. Evans, then offered to re-employ him during the notice period. Evans refused. The employer argued he'd failed to mitigate. The Supreme Court agreed — in part.

The Court held that in some circumstances, a dismissed employee may be required to accept re-employment with the same employer as part of their duty to mitigate. But the Court was careful to limit this principle. The key test is whether it would be objectionable for the employee to return. Factors that make return objectionable include:

- The employer acted in bad faith during the termination

- The working relationship has been poisoned by the litigation

- The employer engaged in harassment, discrimination, or other misconduct

- Returning would involve a loss of dignity or a significantly altered role

- There is a power imbalance that makes the prospect of return unreasonable

In practice, Evans has not led to a flood of employees being forced back to employers who fired them. Courts have applied the "objectionable" exception broadly, recognizing that in most cases, the termination itself has so damaged the employment relationship that return is unrealistic. But the principle is there, and it matters — especially in cases where the termination was amicable (restructuring, position elimination) and the employer offers genuine re-employment.

Comparable Employment: You Don't Have to Take a Demotion

The duty to mitigate requires you to look for comparable employment — not just any employment. This distinction is crucial.

A senior marketing director who was earning $150,000 per year is not required to accept a position as a junior marketing coordinator at $60,000 to satisfy their duty to mitigate. The employment must be reasonably comparable in terms of:

- Compensation (salary, benefits, bonuses)

- Seniority and responsibility level

- Industry and type of work

- Geographic location

- Working conditions

However, the standard of comparability relaxes over time. In the first few months after termination, courts expect you to hold out for a truly comparable role. After six months, you might be expected to consider positions that are somewhat below your previous level. After a year, the expectation broadens further. The logic is sensible: at some point, any reasonable income is better than no income.

What Happens When You Find a New Job

If you find new employment during the reasonable notice period, your mitigation income is generally deducted from your damages. This is straightforward: if you were entitled to 18 months of notice and you found a comparable job after 6 months, you're typically entitled to 6 months of damages (the period you were actually out of work) rather than the full 18.

In Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402, the Ontario Court of Appeal confirmed that mitigation income earned during the reasonable notice period is deducted from the damages award. This is the standard approach across Canadian jurisdictions.

But there's an important nuance. If your new job pays significantly less than your old one, you may be entitled to damages for the difference for the remainder of the notice period. If you were earning $120,000 and mitigated into a $80,000 role, you'd receive $40,000 per year for the remaining notice period. Mitigation doesn't mean accepting a financial penalty in silence.

Practical Advice: How to Protect Yourself

The duty to mitigate sounds burdensome, and it is. But it's also manageable if you approach it strategically:

1. **Start looking immediately.** Don't wait for your legal case to resolve. Courts want to see that you began your job search promptly after termination.

2. **Document everything.** Keep a spreadsheet of every application, every networking contact, every recruiter conversation. Dates, companies, positions, outcomes. This is your evidence.

3. **Be reasonable, not desperate.** You don't need to accept the first offer that comes along. But you do need to consider serious opportunities in your field.

4. **Don't turn down good offers out of spite.** If your former employer offers you re-employment in a comparable role and the working conditions would not be objectionable, refusing could cost you. Get legal advice before saying no.

5. **Invest in your search.** Update your resume, work with recruiters, leverage your network. Courts look at the quality of your effort, not just the quantity.

The duty to mitigate is the price of being made whole. Canadian law gives terminated employees substantial protections — potentially years of reasonable notice — but it expects something in return: a genuine effort to get back on your feet. That's a fair trade.