The purpose of severance is to bridge the gap while a person is unemployed and looking for a new job. As we often tell clients, severance is not intended to provide a windfall. When a person is dismissed from a job, they have an obligation to make reasonable efforts to offset the losses stemming from their dismissal (referred to as the “duty to mitigate”). In the right circumstances, this may include accepting an alternate offer of employment with the same employer or pursuing a reasonable opportunity that has been brought to their attention.

Individuals in Ontario have a duty to mitigate their loss of employment when seeking damages for wrongful (or constructive) dismissal. In practical terms this means that while employees may be able to seek damages from their former employer (to put them in the position they would have been had they received adequate notice of termination), they must make reasonable efforts to replace their lost income by looking for, and accepting, other comparable work.  

We have continually cautioned readers about the use of fixed-term employment contracts. The reason is simple: should fixed-term contracts be ended early, there is a high probability that dismissed employees may be entitled to payment for the balance of the remaining term.

Generally speaking, a dismissed employee has an obligation to take reasonable steps to find, and accept, new comparable employment. Whether it is reasonable to accept new employment will always be a contextual assessment taking into consideration: whether the work is within the individual’s skillset; whether the role is at a similar level of seniority (i.e., Director, Vice-President etc.); whether the compensation is approximately the same; and whether the job is within a reasonable distance from where the individual lives. On this last point, it is generally acknowledged by the courts that it is not reasonable to expect an individual to move cities to accept a new job.

Vey Willetts lawyer Andrew Vey recently spoke with The Lawyer’s Daily for an article entitled “Appellate ruling confirms employers must lead evidence when disputing mitigation efforts: lawyers.“

Dismissed employees are expected to actively search for new work if they want to preserve full severance rights. Yet a recent case out of Ontario suggests there may be more leniency for older workers. This reflects a judicial acknowledgment of the fact that re-employment opportunities tend to become scarce past a certain age.

As we have discussed in previous articles, if you are fired from work and decide to seek severance, you are required to take reasonable steps to find alternate comparable employment. This obligation is referred to as the “duty to mitigate” the loss of your employment.

A long-standing rule of wrongful dismissal cases is that employees who seek additional severance are required to look for new work post-dismissal. Employers are only obligated to pay monies for actual loss incurred beyond any statutory entitlement period.

Most people understand that if they lose their job, they have a right to receive severance from their employer. Generally speaking, what reflects fair severance for a person will depend on a number of factors such as whether the individual has a written employment contract, their age, their tenure of service, their formal education and the availability of comparable jobs in the local market.