Mitigation Income: What's In And What's Out?

Under the common law, an employee who is terminated without cause is entitled to reasonable notice of termination, or pay in lieu thereof. That entitlement is not free of conditions. A wrongfully dismissed employee is subject to a duty to mitigation his/her losses. The duty to mitigate requires a dismissed employee to take reasonable steps to obtain equivalent employment and to accept such employment, if available, failing which the court may reduce the employee's damages. An employer is generally entitled to a deduction in damages for income earned by the dismissed employee during the notice period. The question many employers face is whether all income earned after termination is considered mitigation income. This issue was recently addressed by the Ontario Court of Appeal in the decision of Brake v PJ-M2R Restaurant Inc. 2017 ONCA 402.