If you have just been fired, you might have heard the word “mitigation” used by your company, or from a lawyer.
It’s an important concept to understand in order to protect your rights. Here’s an explanation of what it means and how it relates to dismissal cases.
Mitigation means taking steps to minimize a loss.
In the case of being fired, mitigation means looking for a new job. In other words, you can mitigate the loss of salary from one job by finding another job. Full mitigation is when you find another job that pays the same or more as the job you lost. Partial mitigation is where you find another job that pays less.
If you bring a claim for severance against your company, mitigation can be a factor. While a company may be able to fire an employee without cause, they must pay enough in severance to reasonably enable the employee to secure work again in a comparable position. This money helps the employee to mitigate the difference between the job they are leaving, and the job they obtain to replace it. Part of mitigation is an honest determination of how difficult it will be for the employee to find a new job. Difficulty might be the result of the availability of that job in the marketplace due to supply and demand, the limited jobs available at that level of employment (such as in management), the age of the employee, etc. The harder it will be for the employee to find a comparable job, the more severance might be required.
Mitigation does not matter for Employment Standards Act severance. You are entitled to Employment Standards Act severance whether or not you look for new work or find new work.
Click this link to look up your Employment Standards Act severance entitlement.
Mitigation does matter for common law severance cases. Not every employee is entitled to common law severance. It depends on whether you signed a contract, and even if you did sign a contract, whether the termination provision is enforceable.
If an employee is entitled to common law severance, mitigation does matter. Courts want to see that you made reasonable efforts to look for new work after being fired. If you have tried to look for comparable work but have been unsuccessful, courts should award a full severance. If you have made little or no efforts to look for work, courts might award a lower severance, or even no common law severance at all.
Courts will deduct mitigation income (money that you make from a new job) from a severance award. This is because severance is meant to cover you for the loss of income during a reasonable period of unemployment. New income reduces this loss, so courts reduce the severance award.
Click this link to learn more about common law severance and your potential entitlements.
You might not bring a claim against your company right after dismissal.
Instead, you might negotiate with your company for a severance, by yourself or through a lawyer.
Mitigation is a part of severance negotiations for some companies. Some companies make severance proposals that reduce severance if you earn new income. Another term for this severance reduction is “severance claw back”.
For other companies, mitigation is not a part of severance negotiations. These companies make severance proposals where you keep the full severance regardless of new income.
Mitigation has different impacts at the negotiation and court stages of a case.
If you are fired, new work can affect the value of your severance case.
Make sure you understand how mitigation impacts your particular situation.
If you are confused, it is a good idea to get legal advice before making a severance deal or starting a severance claim.
If you need help reviewing a severance offer or have questions about how mitigation affects your severance case, contact the writer, Jonas McKay, or any of the HHBG Lawyers at 604.696.0556 to schedule an appointment.
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