Mitigation: What Employers Need to Know When Ending Employment

When an employment relationship ends, one legal concept that often comes into play is mitigation. It is a term that comes up frequently in employment law discussions, and lately it is becoming more relevant for employers and HR professionals.

Understanding mitigation is important because it can directly affect the financial risk associated with a termination.

What Is Mitigation?

In simple terms, mitigation is the duty of a dismissed employee to look for new work.

If an employee is entitled to reasonable notice under common law, they are expected to make reasonable efforts to find comparable employment. If they do find work during the notice period, the income they earn may reduce the damages owed by the employer.

That sounds straightforward, but in practice it can become more complicated.

The Bar Is Lower Than Many Employers Expect

One of the realities of employment law is that courts recognize there is often a power imbalance between employers and employees. Because of this, the responsibility to prove a failure to mitigate usually falls on the employer.

In many cases, an employee may only need to show that they were actively searching for work. This might simply mean providing a list of jobs they applied for during the notice period.

For employers, the expectation can be much higher. If an employer wants to argue that someone failed to mitigate their damages, they may need to show:

• That comparable jobs existed in the labour market

• That the employee could reasonably have applied for them

• That the employee did not make reasonable efforts to pursue those opportunities

Comparable employment usually means a position that is relatively similar in terms of:

• Status or level of responsibility

• Hours of work

• Compensation

• Location

Even then, the interpretation of what counts as “comparable” can vary depending on the situation.

Why Mitigation Can Be Challenging for Employers

The challenge for employers is that mitigation can require significant documentation and labour market awareness.

Employers may need to demonstrate what opportunities existed in the market at the time and whether those roles were realistically available to the employee. Meanwhile, employees often only need to show that they were generally applying for positions.

Because of this, it is important for employers to think about mitigation at the time of termination, not months later if a dispute arises.

Practical Ways Employers Can Reduce Risk

While mitigation can seem frustrating from an employer’s perspective, there are several steps that can help reduce risk.

Consider Salary Continuance

Instead of providing a large lump-sum payment, many employers choose salary continuance.

This approach provides ongoing payments during the notice period and often includes a clawback provision if the employee finds new employment.

In practical terms, it encourages the employee to actively look for work while also limiting the employer’s financial exposure if they secure a new position quickly.

Support the Employee’s Job Search

Helping an employee transition to new employment can actually benefit everyone involved.

Providing things like:

• A proof of employment letter

• A reference letter where appropriate

• Information about potential job opportunities

can demonstrate that the employer acted reasonably and supported the employee’s efforts to move forward.

Consider Outplacement Support

For senior roles or positions with larger severance obligations, outplacement services can be a smart investment.

Outplacement support typically includes career coaching, resume development, interview preparation, and job search strategy.

While there is a cost involved, helping someone land a new role sooner can significantly reduce the overall cost and risk associated with termination.

Taking a Strategic Approach to Terminations

Ending employment is never easy, but it is something most organizations will face at some point.

The key is ensuring the process is handled thoughtfully and strategically by focusing on:

• Compliance with employment law

• Proper documentation

• Respectful communication

• Supporting the employee’s transition

A well-managed termination process not only helps reduce legal risk, it also helps maintain professionalism and dignity during a difficult situation.

How Red Rock HR Can Help

At Red Rock HR Ltd., we regularly support organizations through the termination process.

This includes helping employers:

• Navigate difficult termination decisions

• Structure severance and salary continuance arrangements

• Document mitigation efforts

• Provide outplacement and career transition support

Our goal is to help employers manage these situations professionally while reducing risk and supporting employees through the transition.

Because sometimes the best mitigation strategy is not just about limiting liability — it is about helping someone move forward.

Red Rock HR Ltd.

~Strengthening Your Foundation.