Is a dismissed employee's admission that he didn't even bother to look for new employment enough to prove that he failed to mitigate his damages? According to the Court of Appeal for Ontario, it is not.
A dismissed employee’s duty to mitigate his or her termination entitlements remains one of the most frustrating and irritating aspects of employment law. Employees loathe the idea that they must actively work against their own short-term financial interests. Employers find the legal test for proving an employee has failed to mitigate such damages nearly impossible.
In Williamson v. Brandt Tractor Inc., 2026 ONCA 272, the Court of Appeal for Ontario succinctly restated two fundamental components of the legal duty: those concerning the employer’s onus to prove a failure to mitigate and when and when and how to deduct earnings when the employee does.
Facts
The facts of the case are somewhat immaterial to this post. The appeal came from a decision of Justice R. Lee Akazaki of the Superior Court of Justice, dated May 1, 2025, with reasons reported at 2025 ONSC 2571.
Restatement of the Duty to Mitigate Post-Termination Damages
The Court of Appeal’s written endorsement is a refreshingly short ten paragraphs long. While that is helpful for those with a pre-existing understanding of the applicable jurisprudence, such laconic writing is less helpful for those without.
For example, in explaining the test for proving an employee has failed to properly mitigate his damages, the court wrote the following, “The appellant’s burden was to establish not only that the respondent failed to pursue comparable employment, but also that such employment was available – that if reasonable steps had been taken, the respondent would have secured a comparable position. The appellant failed to establish that comparable employment was available. The respondent’s choice not to seek employment in the sales field did not relieve the appellant of its burden in this regard.”
While I agree with that statement of law, the court would have assisted others had it simply cited Lake v. La Presse , 2022 ONCA 742 at the end of such statement.
In Lake, the Court of Appeal stated the test as follows:
[12] While a terminated employee has a duty to take reasonable steps to mitigate, the onus is on the defendant to demonstrate that the plaintiff could reasonably have avoided a loss or that she acted unreasonably in failing to do so. The defendant must prove: (1) that the plaintiff failed to take reasonable steps to mitigate her damages; and (2) that if she had done so she would have been expected to secure a comparable position reasonably adapted to her abilities. [Internal citations omitted.]
Maybe that test is now so well-established that it no longer needs citation. I don’t know. But every time it gets stated or referenced, representatives on the management side of the bar seem surprised. Perhaps it’s just frustration.
With respect to when and how to deduct an employee’s mitigatory earnings, recall the Court of Appeal’s decision in Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402, about which I blogged in my post Court of Appeal Rules that Modest Earnings Earned during Notice Period Not to be Deducted from Wrongful Dismissal Damages.
Here, the Court of Appeal said the following:
[7] The trial judge erred by refusing to deduct money the respondent earned during the notice period because he earned it in a “lower-paying or ranking position”. There is no authority for the proposition that earnings that come from an inferior position are not deductible in mitigation. The passage in Brake v. PJ-M2R Restaurant Inc., at paras. 157-58, cited by the trial judge comes from a concurring opinion and does not state the law in Ontario. The law is as stated by the majority in Brake at para. 99: Subject to additional circumstances not relevant in this case, “employment income earned during the notice period is generally to be treated as mitigation of loss”.
The Court of Appeal did not explain what made this employee’s mitigatory earnings different from those of Ms. Brake.
Commentary
Since the Court of Appeal’s decision in Lake, many of us on the management-side of the bar have asked how an employer can factually establish not only that reasonably comparable positions existed, but that had the employee applied for such positions, that the dismissed employee would have been offered the position. Practically, how does the employer establish that factual record without calling the potential employer as a witness? Maybe the employer calls an expert witness, such as a recruiter? The bar, not even considering practical or financial limitations, simply feels too high.
Does that mean that the test is wrong? Not necessarily. I get it. Courts deal in evidence. A judge is right to want to know, before deducting damages to which the plaintiff is otherwise entitled, that the plaintiff ought to have secured new employment earlier.
Here, however, the plaintiff admitted that he did not seek a comparable job in sales. Surely, that must count for something? “It does not”, says the Court of Appeal. The burden is on the employer to demonstrate what would have happened had he bothered to try.
Takeaways for Employers
The takeaway for employers is effectively this: If you want to argue that an employee has failed to mitigate his damages, you better hope that employee has an identical twin, with an identical set of circumstances, who was also looking for employment in the same field, with the same credentials, who is prepared to testify on your behalf. Or perhaps you find an employer, willing to testify on your behalf, who will depose that had dismissed employee applied, it would have hired him. Absent that evidence, I’m not sure there is much point in litigating the point.
Takeaways for Employees
While the takeaway for employees may appear to be “don’t worry about the duty to mitigate; the employer will almost never be able to establish that you failed to do so”, recall what the British Columbia Court of Appeal said about the duty:
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.
When an employee mitigates sooner than he anticipated, the advice I always provide this advice: “The bad new is, you’re fine.” Wrongful dismissal damages are intended to bridge an employee from one job to the next at no economic loss; they are not intended to be a reward for long service. Severance is intended as the reward for long service and, at least under Ontario law, it is a distinct entitlement separate from that of notice. While the concepts of notice and severance often get comingled and therefore confused, they are different. The wrongful dismissal case will end. The severance money will get spent. New employment is better.
Sean Bawden: Experience. At Work.
I am an experienced employment lawyer and wrongful dismissal lawyer practicing across Ontario and beyond with Kelly Santini LLP, which is based in Ottawa.
For two and a half years I was in-house legal counsel providing employment law advice to one of Canada’s largest corporations and appeared in labour courts and tribunals literally the world over.
I have also been a part-time professor at Algonquin College and have taught Employment Law, Trial Advocacy for Paralegals, and Small Claims Court Practice. I am a past president (2024-2025) of the County of Carleton Law Association (“CCLA”), and have sat as a safe sport adjudicator.
I can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321 x233.
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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.
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