The Chronicle Herald (Metro)

Severance pay comes with strings

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We always go through the job searches of ex-employees with a finetooth comb. In doing so, it often becomes clear that the job searches are falsified...

The law around mitigation income — the income you earn from a new job after being fired from an old one — is relatively straightfo­rward. While the entitlemen­ts to severance in a wrongful dismissal case can be significan­t, employees often forget that in order to collect this pay from their exemployer, they have to remain unemployed after they are fired, or this new income will generally be deducted from it.

The courts will sometimes not deduct mitigation income, particular­ly during the employment standards period, if the new job and income is significan­tly less than what that employee used to earn.

Put simply, you can't double dip and continue to collect income from both your old employer and from your new job. You have an obligation to mitigate your damages by finding another job. If you cannot find one, you must be prepared to explain why.

It is not surprising, then, that some scorned employees will evade this obligation to mitigate their damages from the dismissal. While there is rarely a silver lining in being fired, being paid a salary (during the reasonable notice period) while sitting at home focusing on your hobbies rather than pounding the pavement to find new work is an appealing option to some in an otherwise grim situation.

While ex-employees are usually told by their lawyers that they have an obligation to look for another job after being fired, they often do not take that advice seriously. A court will deal with mitigation as follows:

• An employee's monetary award will be reduced by the amount of employment income the employee earned from other sources during the reasonable notice period;

• An employee's monetary award may be reduced if the employer can prove that the employee did not take reasonable steps to find another job after being fired.

Some employees, particular­ly those nearing retirement, feel little incentive to look for work (sometimes with a slightly lesser salary) when the alternativ­e is to stay home and collect full salary from their exemployer.

The onus lies with the employer to prove the employee did not try to find another job and could have found one if they tried. The employer must show that the dismissed employee's conduct was unreasonab­le, not in one respect, but in all respects. The employer must prove that attempts to look for another job were falsified or made in bad faith or that the employee could have just done much better if they seriously tried.

Some lawyers tell their employer clients that given the difficulty in proving that the employee did not make efforts to find a job, they should abandon the failure-to-mitigate argument altogether.

We strongly disagree. After years of practice, we can tell you it is not very difficult to prove that an employee has little interest in actually finding a new job after being terminated when that is the case.

Not long ago, an employment lawyer we know from another firm told me that she simply told her clients to make the softest of efforts in looking for other work by “throwing out a few random resumes” and “making a chart” of job searches. She told me that this was the advice she had given for the better part of ten years, and employers rarely raised failure-to-mitigate during litigation or negotiatio­ns.

We always go through the job searches of ex-employees with a fine-tooth comb. In doing so, it often becomes clear that the job searches are falsified or undertaken with no real intention to find a job. In fact, employees often work hard to appear to be looking for a new position when that is precisely what they do not wish as it reduces their severance entitlemen­t.

A recent 2021 Ontario employment case confirms that soft attempts to find meaningful and comparable work will likely result in a reduction of any damages that would have been otherwise payable.

In Merida Lake v. La Presse 2018, a 52-year-old employee in a managerial position with La Presse was terminated after almost six years of employment. When her case was heard two years after her terminatio­n, she remained unemployed. She argued she had made use of the outplaceme­nt services her employer offered, and that she had applied for 11 positions that she was qualified for, all to no avail.

In reducing her damages by two months (from eight to six), the court found that her efforts to find alternativ­e employment were not reasonable because:

• She was looking for jobs that were objectivel­y a promotion; nine of the 11 positions were VP roles despite the fact that she held no such title with her old employer

• She waited too long to make use of the outplaceme­nt counsellin­g services that were offered to her

• She applied for her first job 2.5 months after she was terminated (the courts consider the first month after the terminatio­n to be an acceptable adjustment period) with no explanatio­n

• She did not apply for any jobs in media, her industry

The employee also argued there were no positions that she was qualified for. The court rejected this by looking at the multiple postings she could have applied for, evidence presented by the employer.

As an employer you are entitled to ask for more. A list of job applicatio­ns means little without looking at the covering letters and emails that go with them. Has the employee contacted placement agencies, former employers, your competitor­s, looked daily at webpages and made contact? We often come to court with reams of jobs that the employee should have applied to but did not. Or lists of employers that would have hired that employee if they had applied.

This recent case will go a long way to solidify the law around the duty to mitigate: While the onus remains on employers to prove the employee did not mitigate, employees must make reasonable efforts to apply for all the jobs that are comparable.

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