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Should you look for work while suing your former employer?

2017-05-15

Employees who sue their employers for wrongful dismissal have an obligation to look for a new job, says Toronto civil and commercial litigator Jonathan Miller.

“If you accept the severance that’s offered by the company, you are essentially accepting the terms of the termination,” explains Miller, an associate with the Toronto office of Shibley Righton LLP.

“But when a worker thinks he’s entitled to more than what’s offered, a lawsuit tends to follow,” he tells AdvocateDaily.com.

“In such a case, the employee has to prove he’s been looking for work or the courts may reduce the amount of damages awarded.”

An employee’s obligation to mitigate means they need to make reasonable efforts, but they’re not required to accept the first available job offer or take a lesser position, Miller says.

“The courts are not going to say you have to take any job just to reduce damages. You have to be able to prove that you made a reasonable effort to find something comparable, in position and compensation.”

Miller says it’s important to understand the purpose of severance. When an employee has been terminated without cause, he is entitled to reasonable notice of dismissal – which is intended to allow him time to find a new job – or pay in lieu of notice.

So if an employee is offered money instead of notice and he decides to sue for more rather than accept it, he has a duty to mitigate, which means he has a legal obligation to look for new employment.

Any income earned in a new job is deducted from what the former employer owes the employee in damages that may be awarded by the courts.

“Clients often come in with wide eyes thinking they’re going to get a full year's pay,” says Miller, “but severance depends on a variety of factors."

If, for example, an employee sues for 12 months of severance and finds a lower paying job after two months, he would end up getting two months at full salary and 10 months of the difference between the two salaries if they are successful at trial.

"So a $350,000 severance package may start to look more like $50,000 or $60,000," says Miller.

The courts could also expect workers to explore other ways to mitigate losses.

“People should also consider applying for EI or, if there are allegations that the termination was for a disability, they should consider applying for short-term or long-term disability benefits," says Miller.

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2017-05-15