Proving Failure To Mitigate: Rare, But Not Impossible

In employment litigation, the bar is high for employers looking to prove that a dismissed employee failed to make reasonable efforts to mitigate damages arising from the loss of their employment. However, the recent Alberta Court of Justice decision of Hill v Canyon Dental Centre Ltd. (2025 ABCJ 163) ("Hill") provides a rare example of the evidence required to successfully advance such a position.

Background

The plaintiff employee, Ms. Hill (the "Employee"), worked as a dental receptionist for Canyon Dental Centre (the "Employer") for over 14 years.

Following the without cause termination of her employment, the Employee commenced a civil claim for pay in lieu of 15 months reasonable notice of her termination, as well as punitive damages. In defending the claim, the Employer submitted that the 15 month notice period sought by the Employee was excessive and that there was no basis for an award of punitive damages. The Employer further argued that the Employee failed to mitigate her damages.

Before turning to mitigation, the Court reviewed the parties' respective positions on the applicable notice period and, favoring the Employer's submissions, fixed the notice period at 10 months.

Mitigation, Generally

Absent an enforceable contractual term to the contrary, an employer is required to provide an employee with common law reasonable notice of their termination, or pay in lieu of said notice, when terminating the employee's employment without cause.

An employer's potential liability to a terminated employee, however, is subject to the employee's duty to mitigate, which broadly requires that an employee take reasonable steps to seek alternative comparable employment and to accept such employment if it is available.

Pay in lieu of reasonable notice, then, is arrived at by calculating the eligible compensation that the terminated employee would have earned over the notice period assessed by the court, and subtracting the mitigating income earned by the employee over that same period. Mitigation, therefore, can be (and is) a significant issue in wrongful dismissal litigation – having the potential to significantly reduce the damages an employer owes to a dismissed employee.

Mitigation is also relevant where an employer believes that a terminated employee could have, but did not, obtain employment during the notice period. However, employers face an uphill battle when attempting to prove that an employee failed to satisfy their duty to mitigate, being required to satisfy both of the following requirements:

1. demonstrate that the employee failed to make reasonable efforts to find employment; and
2. show that comparatively similar employment could have been obtained.

The onus is on the employer at both stages.

Failure to Mitigate in Hill

Notwithstanding this high bar, the defendant employer in Hill was able to satisfy the test and, in doing so, provides valuable insight into the quantum and quality of evidence needed to do so.

In particular, the Court in Hill relied on the following evidence to find that the Employee's job search was unreasonable:

• the Employee only sent out 5 inquiries to employers in the first 4 months post-termination;
• the Employee relied on Facebook groups for her job hunt, while ignoring mainstream job sites;
• the Employee applied to just 4 of the 133 comparable postings the Employer produced; and
• the Employee restricted her search to dental practices, despite transferable skills to other industries.

Meanwhile, the Employer presented evidence of a "vibrant market" for dental administrators and receptionists, including over 133 comparable job postings and witness testimony of "extremely high demand" for such positions. Together, the evidence satisfied both prongs of the test – a rare finding of failed mitigation.

The Impact of Failing to Mitigate

Despite finding that the Employee failed to make reasonable efforts to mitigate, the Court only reduced the Employee's notice period from 10 months to 8, linking the reduction to when the Employee received a comparable job offer 8.5 months post-termination (the "Offer"). Thus, even when an employer meets the high bar of proving a failure to mitigate, an employer's liability will likely only be reduced, not eliminated. In deciding the extent of any such reduction, Alberta courts will exercise their broad discretion, often looking to tie the reduction to concrete evidence (such as the Offer).

Other Takeaways

While not the focus of the decision, other noteworthy takeaways from Hill include the following:

• Notice Period: While courts have long rejected the so-called 'rule of thumb' of one-month of reasonable notice per one-year of employment, the 10 month notice period originally awarded in Hill (equivalent to 0.68 months per year of employment) is employer-friendly and demonstrates the potential impact of a robust job market on notice period assessment.
• Supplemental vs. Replacement Income: Employment that the Employee previously held with another clinic, and which she continued post-termination, was treated by the Court as supplemental income, not mitigation income. Such income, accordingly, did not apply to reduce the damages awarded to the Employee.
• Punitive Damages: The Employee submitted that punitive damages were warranted as the Employer plead and relied on the terms of an allegedly unenforceable termination clause up to the eve of trial. In this respect, the Court found that the abandonment of a defence and/or the reliance on an unenforceable termination clause through trial could lead to cost consequences, but would not alone justify an award of punitive damages.

Significance for Employers

Hill serves as a relevant reminder of the impact of mitigation in wrongful dismissal actions and the evidentiary burden that an employer must meet to prove that an employee's mitigation efforts were unreasonable (which evidentiary burden an employer must be mindful of from the outset).

A special thank you to Brandon Fleming, articling student, for his collaboration.

To view the original article click here

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.