After termination, employees have an obligation to act in their
best interests. In many situations, this includes the
requirement to seek alternative employment and mitigate their
loss. The principle is of benefit to employers, since the
Courts will deduct income earned in mitigation from damages in lieu
of notice. Severance agreements will often reflect this
principle in some respect. Mitigation can have a significant
impact on an employer's liability arising from
termination. The issue raises many questions.
What is expected of employees in their mitigation efforts?
If an employee does not look for work, should they still get
damages in lieu of notice? What can an employer do about
it? Can damages be reduced if the employee did not act
reasonably? These are questions the Court of Appeal addressed
in Steinebach v. Clean Energy Compression Corp.,
2016 BCCA 112.
Mr. Steinebach was a sales person for a natural gas fueling
company until he was dismissed. In the month following termination
he began to search for new jobs in the natural gas industry. At the
same time he also pursued a potential career in financial
services. After approximately one month he ceased searching in
the natural gas industry and solely pursued a career in financial
services. He found a financial services job approximately six
The burden is on the employer to demonstrate that the employee
failed to mitigate by acting reasonably. Courts typically
require substantial evidence such as a good offer rejected by an
employee or dilatory behaviour. In this case, however, the
employee described his search as "very passive."
The company also said Mr. Steinebach ought to have looked for
work in natural gas. Mr. Steinebach admitted he been
"very single-minded about looking at what it will take ... to
get established in the financial management field". Mr.
Steinebach also acknowledged that he had been spending about three
hours per day on financial course studies and the remainder of the
day devoted to home-schooling his child. He acknowledged that,
"...I'm not working my contacts, so to speak, I'm not
calling people and pushing buttons."
At trial the Judge found that Mr. Steinbach had failed to
reasonably mitigate and that he "failed to pursue available
opportunities that fell within his skill and experience", he
"placed a greater emphasis on his personal preferences and
career objectives than was reasonable in all of the
circumstances" and "if he had done more he would likely
have achieved greater success in finding employment in the industry
that he had spent the major part of his working
The Court of Appeal did not overturn the trial judge's
determination on failure to mitigate. However, it had a challenge
with how it affected damages. To the consternation of both
parties, the matter was sent back to trial because there was no
evidence about when Mr. Steinebach may have found appropriate
alternative employment had he conducted a more focused job
search. The case demonstrates the compounded challenge for
employers to establish a failure to mitigate and then to prove how
much, if any, damages should be reduced.
Employers face an increasingly heavy burden in litigation when
faced with employees who are not diligent in their job
search. Employers will probably benefit more from negotiated
settlements which account for a reduction, or even an incentive for
finding new employment. In Court, while an employee's
change in career or pursuit of a job is a part-time exercise may
result in a reduction of severance owed, demonstrating the
reduction will be difficult.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).