'The best practices for any employer... is to put the employee on notice of what they're requiring for evidence': lawyer discusses employer responsibilities in wage loss mitigation
When an employee is terminated, it is widely accepted that they have a duty to mitigate their wage loss by seeking comparable employment. However, if litigation arises, the onus to prove they failed to do so falls squarely on the employer.
This fact was underscored in recent arbitration decision that saw an employee awarded over $300,000 in lost wages, largely due to the employer’s failure to provide evidence of his lack of mitigation.
As Randi Collins, managing lawyer at Getz Collins and Associates in Calgary, explains, lack of evidence does not equal lack of effort in the eyes of a judge.
“Just because you don't have a lot of evidence in favour of your efforts does not mean that you're lying about it,” she says. “It doesn't automatically make you less credible if you don't have a large amount of evidence supplied."
This means employers must actively gather proof if they intend to challenge a former employee’s mitigation efforts, Collins adds. Simply arguing that an employee did not do enough without supporting evidence is unlikely to succeed.
Requesting documentation from employees
Employers should not wait until litigation arises to begin requesting documentation from former employees. Best practices dictate that mitigation requirements should be clearly communicated at termination, including an explicit request for records.
"The best practices for any employer — once an employee is terminated and they're aware that they're going through a potential litigation process — is to put the employee on notice of what they're requiring for evidence, and you can provide a list, such as on a monthly basis," Collins says.
This list should include records of job applications, interview dates, rejections, any job offers, and all sources of income post-termination. Employers should also remind former employees that this obligation is ongoing and that they should keep careful documentation of their efforts.
Setting clear expectations of wage loss mitigation
The case involved an employee who was terminated from his role as a courier at Purolator in 2019, then reinstated in 2023 with a five-day suspension. Purolator was ordered to compensate him for lost wages, but challenged the amount claiming the employee had not properly mitigated his losses.
One of the key elements of the employee’s case was his testimony regarding his job search efforts; as the arbitrator noted, he “adamantly and consistently testified that he was not aware, until he had been reinstated by way of the July 26, 2023 decision, that he would be called upon to produce evidence of his job search going back to his termination on May 27, 2019.”
The arbitrator believed the employee’s statements, because Purolator could not provide any proof the employee had been instructed to mitigate. Collins emphasizes that if employers wait until litigation begins to begin requesting documentation from former employees, it will likely be too late.
Putting employees on notice early
If a significant gap exists between termination and when an employee files a claim, the employer may have lost crucial opportunities to obtain records. There are some indications of future litigation that employers can be aware of, Collins say.
“If you have asked the employee to sign a release and to accept a dollar amount for severance, and they have refused, you do have some indication that there is potential down the line that they do engage in some litigation,” she says.
“Put that request in and put them on notice that you are going to be requiring that they keep those records, from the date of termination moving forward. Once you actually have received notice, immediately start asking for that information … so you may have a gap, but it won't be as big as waiting.”
This puts the employee on formal notice of their requirements, Collins says, and if they do not comply further measures can be pursued such as compelling the employee through a court.
Tracking job market opportunities
Beyond requesting documentation from employees, Collins highly recommends employers take proactive steps by monitoring the job market themselves.
If they can show that comparable job postings were available during the period of mitigation, but the former employee failed to apply, it could strengthen their position in any future dispute.
“If they can see job postings of a similar nature for that employee, keeping copies of those postings and also putting those to the employee as to whether or not they've considered these additional postings, whether or not they've actually attempted to look into those – that is fantastic evidence, on behalf of the employer," she says.
Employers should also document these instances, not only that they presented job opportunities to the employee but how the employee responded.
“If they decline to go to those interviews, then they are then on the side of having to provide a reasonable excuse as to why they couldn't apply or did not proceed with moving towards those positions,” says Collins.
Employment contracts and termination letters
One of the most effective ways to ensure compliance with mitigation expectations, says Collins, is to include clear language in termination letters and employment contracts.
These documents should make it explicit that the employee has an ongoing duty to mitigate wage loss post-termination, and specify what records they must retain, “so that if there is litigation in the future, that you have access to them,” she notes.
“It's essentially putting them on notice, so that the employee down the line can't say, ‘Well, I didn't realize I had to keep those records.’ You've put them on notice right at the beginning, saying, ‘If you don't accept this offer, [this is a] reminder of your obligation to mitigate, and we ask that you keep a collection of these specific items and documents, as we'll be seeking them should this result in litigation.’”
While the arbitrator did not award any punitive or aggravated damages, Purolator has been ordered to pay the employee at least $212,000, before interest, benefits and overtime adjustments yet to be added. Just over $110,000 of income during the mitigation period was subtracted from the initial total of almost $300,000 of lost wages.
