In courts across Canada, judges have recognized the responsibility of both employers and employees when it comes to termination. Employers must keep employees whole, but employees must keep looking for work, which is known as the duty to mitigate. This duty to mitigate is not unique to employment law – in most any civil claim for damages plaintiffs are required to effectively ‘cut their losses,’ and they should not be able to recover losses that could have been avoided. The unique twist to employment law though is that the ‘duty’ actually falls on the employer’s shoulders to prove that the employee has failed to take sufficient steps to find new work and minimize their losses.
There is also an important distinction here between lump sum and salary continuance payments. If you and the employee agree to a lump sum amount, they are essentially free after the deal is done to do what they wish. They could choose to retire, or start a new job the next week, and neither would make much difference. If the employee is paid out on a salary continuance though (and there is a ‘claw back’ in place reducing your payment obligations if they find new work), then the onus is on them to keep looking for replacement income.
