The Duty to Mitigate in Ontario: An Easy Guide
When someone is fired without cause and sues for wrongful dismissal, the court asks a simple follow-up: what did you do to reduce your losses? That follow-up is the duty to mitigate. It’s one of the biggest swing factors in how much an employee actually recovers—and in how much an employer pays.
This guide explains what mitigation is, how it works in Ontario, the key exceptions, and practical steps for both sides.
TL;DR
Employees must try to find comparable work after dismissal and keep reasonable records. Money earned during the court-assessed notice period usually reduces damages.
The employer bears the burden to prove a failure to mitigate (with real evidence).
ESA minimums don’t shrink for mitigation; common-law notice does.
Exceptions exist: fixed-term contracts without valid termination clauses, or deals that set a fixed termination amount, often remove the duty to mitigate.
Sometimes employees must even consider returning to the same employer if a reasonable offer is made and the environment isn’t toxic.
What is the duty to mitigate?
Mitigation means taking reasonable steps to limit your loss. In a dismissal context, that usually means:
Searching for comparable work (similar pay, status, duties, and location),
Applying broadly and consistently, and
Accepting reasonable offers, including short-term roles, where appropriate.
Mitigation is about reasonableness, not perfection. Courts don’t expect a job the next day; they expect a genuine, documented effort.
Who has to prove what?
The employer must prove the employee didn’t make reasonable efforts and that comparable jobs were available the employee could likely have obtained.
Employees help themselves by keeping job-search logs: applications, recruiter outreach, interviews, and outcomes.
What counts as “comparable work”?
Courts look at the Bardal factors (age, position, length of service, job market) and compare the character of employment:
Comparable: similar level of responsibility, compensation, and hours, within a reasonable commute or remote equivalent.
Not comparable: significant demotion, major pay cut, relocation that’s unreasonable, or a work environment that’s humiliating or hostile.
Same-employer offers: In some cases, employees may be expected to accept re-employment with the dismissing employer if the role is reasonable and the relationship isn’t poisoned. Refusing a reasonable offer can cut damages dramatically.
What income is deducted from damages?
Courts typically do a dollar-for-dollar set-off of income earned during the common-law notice period from comparable employment (or self-employment).
Important carve-outs:
ESA minimums (termination pay and, where applicable, severance pay) are statutory—they’re paid regardless of mitigation.
Income earned during the ESA “statutory entitlement period” generally is not deducted from the overall award.
Earnings from inferior employment (e.g., taking a clearly “survival job” when no comparable roles exist) may, in some circumstances, not be deducted.
EI vs. CERB (pandemic-era benefits): EI is typically repayable to the government when you receive a wrongful-dismissal award. Courts in Ontario have generally not deducted CERB from damages; outcomes elsewhere varied during the pandemic, but appellate guidance now largely points against deduction.
Key exceptions to the duty to mitigate
Fixed-term contracts (no valid early-termination clause)
If an employer ends a fixed-term contract early and the termination clause is invalid, Ontario courts have held the employee is typically owed pay to the end of the term—without a duty to mitigate (unless the contract clearly says otherwise).Agreed “fixed” termination amounts
If the contract sets a clear, lump-sum termination payment (a true liquidated amount), some courts treat that amount as not subject to mitigation—because it’s a contracted figure, not damages.
Salary continuance vs. lump sum: why it matters
Salary continuance packages almost always include a mitigation (clawback) clause: if the employee lands a new job, payments stop or a percentage of the remaining balance is paid (commonly 50%).
Lump sums are typically final—no ongoing clawbacks—so employers often discount lump sums to reflect mitigation risk.
Employers: If mitigation matters to you, use salary continuance (with a fair clawback).
Employees: Understand the trade-off before you sign a release.
Asset sales and mitigation (quick note)
In an asset sale, employment with the seller usually ends at closing. If the buyer offers comparable employment, employees often must accept to mitigate losses against the seller. Refusing a reasonable buyer offer can shrink or eliminate the seller-side claim.
Practical steps
For employees
Start the search quickly (within days).
Document everything: positions, dates, portals, recruiters, interviews.
Aim for comparable roles but be flexible on titles.
Consider same-employer offers if they’re reasonable and not hostile.
Keep pay stubs from any new work—courts will ask.
For employers
Offer reasonable work (even temporary) to create mitigation options.
Gather evidence of available jobs (postings, recruiter affidavits) if you’ll argue failure to mitigate.
Pick your payment method deliberately (continuance with clawback vs. lump sum).
Don’t net against ESA minimums—they’re owed regardless.
Be precise in contracts: fixed-term logic, termination amounts, and mitigation language should be crystal clear.
FAQs
Do I have to take a lower-pay job?
You should keep looking for comparable work. If none exists, taking an interim, lower-pay role won’t usually hurt your case—and may not be deducted in some circumstances.
Can I refuse a job with my old employer?
It depends. If the offer is reasonable and the atmosphere isn’t poisoned, refusing can reduce your award. If trust is broken or the role is a demotion, the refusal may be reasonable.
What if I don’t look for work at all?
Courts can reduce your damages substantially. The employer still has to prove its case, but a thin job-search record makes that easy.
Does mitigation affect my ESA termination/severance?
No. ESA minimums are paid regardless. Mitigation affects common-law damages.
If I’m on a fixed-term contract, do I have to mitigate?
Often no, if the contract lacks a valid early-termination clause and you’re claiming pay to the end of term. Read your agreement and get advice.
Bottom line
The duty to mitigate is about reasonableness and evidence. Employees who search diligently and keep records protect their award. Employers who create and document real opportunities reduce their exposure. Getting mitigation right can be the difference between a modest payment and a major one.
This article is legal information, not legal advice. For guidance on your specific situation, contact Vanguard Law.