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Navigating Employee Dismissal: A Dentist’s Guide to Effective Mitigation Tactics

By April 23, 2024April 29th, 2024Employment Law

Have you ever faced a wrongful dismissal claim at your dental practice? Over the years, we’ve discussed many ways for employer dentists to insulate against wrongful dismissal or constructive dismissal liability and best practices to avoid litigation altogether. But if you do find yourself facing such a claim, understanding the concept of mitigation could save you stress and significant financial resources.

This post delves into the basics of mitigation within the context of employment law and its practical application to your dental practice.

Understanding Mitigation

Mitigation refers to “cutting your losses” after an adverse event without waiving or abandoning legal rights. In the context of Ontario Employment Law, mitigation refers to the legal obligation of a dismissed employee to make reasonable efforts to find comparable new employment, subsequently reducing potential damages owed by the employer. The damages are reduced based on the income the employee could have obtained during their notice period. The underlying idea behind mitigation is that a plaintiff should not receive compensation for losses they could have avoided. This flows from the idea that mitigation is about looking out for one’s interests, as any practical person would. Ontario court decisions continue to remind us that mitigation is not merely an obligation owed by the employee to the employer but rather a responsibility the employee has towards themselves.

Why Mitigation Matters to Your Dental Practice

As an employer, understanding mitigation safeguards your business’s financial health and fosters a fair resolution of employment disputes. It is a powerful strategy to:

  • Minimize potential liability in wrongful dismissal claims.
  • Promote fair and equitable resolutions.
  • Establish a standard of responsibility for both employer and employee post-termination.

The Duty to Mitigate

In the context of wrongful termination claims, the duty to mitigate raises several questions:

  • What types of jobs or comparable income sources should the dismissed employee seek?
  • How diligently should they pursue new job opportunities?
  • What is the likelihood that the employee will be hired for comparable roles?

Comparable Employment Explained

Comparable employment refers to alternative positions or gainful employment that are similar in status, hours, and compensation to the dismissed employee’s previous job. The position should suit the employee’s abilities and represent something the employee could secure or reasonably be expected to secure. Importantly, there is no obligation for dismissed employees to settle for lesser-paying work to mitigate their losses, even if their initial job searches are unsuccessful.

Assessing Reasonable Efforts

In an employment litigation situation, the employer bears the burden of proof to show that the employee has not made adequate efforts to find similar work.

When evaluating an employee’s efforts to mitigate damages, courts look for ‘reasonable’ efforts, not perfection. This means that even modest job search efforts may be deemed sufficient, provided the employer cannot prove that more suitable positions were readily attainable and the employee failed to pursue them.

The “Could” vs. “Would” Standard

Different courts have adopted different standards for assessing the likelihood of a dismissed employee finding comparable employment. Some follow the Could standard, focusing on whether the employee could have procured comparable employment with diligent searching. Others adopt the Would standard, considering whether the employee would have been expected to find a comparable job. Although this may seem like more of a semantic nitpick between the two words, the Superior Court of Justice has stated that there is indeed a substantive difference and currently favours the Could standard.

For the dentist employer, this means that you would be required to prove that the employee, with enough diligence, could have obtained another job of a similar kind reasonably adapted to their abilities. You would not need to speculate on or try to prove the “odds” of obtaining said job.

Mitigation Income: What Counts?

Mitigation income is earnings accrued through other jobs or undertakings during an employee’s notice period post-termination. This income typically reduces the employer’s liability, as the employee cannot recover for losses they didn’t suffer. It is essential to note some specific exclusions that are not deducted from damages awards:

Income Earned During Statutory Notice

Damage awards do not typically deduct income earned during someone’s Employment Standards Act (ESA) notice period. This is because an employee’s minimum notice entitlement (i.e., to either reasonable notice or pay instead of notice), and other basic statutory entitlements, are not treated as damages per se. These would have been payable whether or not the employee finds new work after the termination, so the ‘calculation’ only commences once the statutory notice period has elapsed.

Employment Insurance Benefits

Employment Insurance (EI) benefits are also not considered income in mitigation cases. Employer remittances of EI contributions are deemed a direct consequence of, or an “obligation incurred by reason of,” one’s employment and, therefore, not within the scope of deductible damages.

Integral (non-discretionary) Bonuses

Damages for wrongful dismissal may also include any bonuses the employee would have earned during their notice period (but for their termination) if (A) the bonus was “integral” to their compensation and (B) the bonus policy does not unambiguously limit their entitlement on termination.

CERB and Personal COVID-19 Benefits

Courts across Canada have been split on whether CERB amounts received by fired employees should be deducted from wrongful dismissal damages. In Ontario, the trend seems to be that CERB payments collected by employees post-termination will generally not be deducted from damages. On the other hand, non-binding precedents in other Canadian jurisdictions (e.g., British Columbia) have supported findings that CERB amounts are deductible from wrongful dismissal damages.

However, it is important to remember that even in Ontario, the Court qualified its finding by warning that its analysis was grounded on the specific facts of that case, leaving wiggle room for different outcomes in situations with different or unique facts.

Supplemental Income

In some cases, employees may continue to earn income after being fired by continuing their ‘side hustles,’ second jobs, and independent business efforts. In those cases, employers may seek to have the courts deduct such income from damages as “avoided losses”.

On the other hand, employees with multiple jobs or ‘side hustles’ may try to counterargue that income derived from such sources should not factor into damages assessments since it is income they could have earned anyway while working for the employer in question.

Recent cases in BC and Ontario have helpfully outlined that income earned from side jobs or independent business interests following termination may count against dismissed employees as mitigatory ‘replacement income’ unless two factors apply:

  1. they must show that their gains are not in replacement of, but rather, irrespective of, the income they would have continued earning from the lost job and
  2. the employer knew of (and accepted) the side job or interest.

Evidence of Mitigation

During employer-employee disputes, evidence of mitigation plays a crucial role. The plaintiff is responsible for presenting the first instance of evidence regarding their efforts to mitigate. This can include documenting job applications, interviews, and any rejection letters received during their job search. While the burden is not high, the employee must show that they made some effort to mitigate damages.

The burden of proof then moves to the employer to demonstrate that the employee could have done more. The employer could let the employee’s efforts (or lack thereof) speak for themselves or introduce their own evidence about how the plaintiff could have done more (i.e., cross-examining the employee, comparing point-in-time ads/classifieds for comparable jobs to the number of applications the employee sent out, etc.).

It is, therefore, in an employer’s best interest to support and encourage the job search efforts of dismissed employees, particularly when the termination was without cause or for non-acrimonious reasons. Some employers have attempted to help former employees in their job hunt efforts by:

  • Sending job postings for alternative jobs
  • Offering career counselling services and access to career coaches
  • Providing access to networking seminars
  • Assisting with resume and LinkedIn profile editing

The hope is that with such resources at their disposal, the dismissed employee gets back on their feet quickly, leaving everybody better off. By documenting your support and the resources offered to help with the employee’s job search, you will have evidence to prove that any subsequent failure on the part of the employee to mitigate despite would be their fault and not yours.

Employer Strategies for Mitigation

Consider the following mitigation approaches to protect yourself and your business against excessive wrongful dismissal damages.

Document Any Offers of Support

If you offer outplacement services or otherwise lend support to the employee’s job search efforts (e.g., by writing a solid recommendation letter), make sure to record and document your actions.

Check In From Time to Time

Depending on your relationship with the dismissed employee and whether things turn litigious or remain professional and cordial, it may be worth keeping tabs on their efforts to find new employment. This may lead to a situation where you decide to lend support (as per above) or even consider bringing them back in an alternate or limited role (as per below).

Offer Alternative Temporary Employment

Offering temporary or alternate work to dismissed employees, even in a different role, is not unheard of and may be a win-win in certain situations. Not only would this help the dismissed employee financially during their notice period, but it may also help fill a need or position in your office (e.g., while someone else is away on leave or temporarily incapacitated). Whether an employee should accept such an offer depends on whether a reasonable person in that situation would do so.

Bottom Line

Mitigation is a complex and significant concept in employment law, particularly in wrongful dismissal cases. Not only should a dismissed employee search for comparable employment and exercise reasonable efforts in doing so, but former employers should actually encourage if not fully support, that process. By understanding and implementing effective mitigation strategies, you can minimize legal risks and promote a responsible employment practice environment.

At DMC, we use our expertise in dental practice law to prepare you for handling the complexities of employment disputes. If you have questions about mitigation strategies or need assistance with any employment law challenges, do not hesitate to contact us. Send me an email or call our team at 416-443-9280.

The Content of this post is provided for informational purposes only. It is not intended to be legal, financial, tax, or other professional advice of any kind. You are advised to contact DMC (or other counsel) to seek specific legal advice concerning your individual situation.

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