Mitigation and contractual notice of termination

Employee finding new employment before contractual notice is paid out
By Brian Johnston
|Canadian Employment Law Today|Last Updated: 05/16/2012

Question: An employee has a contract that requires 12 months’ notice for termination without cause. Is the company required to continue paying the employee during this notice period if the employee finds other employment quickly? Can a clause be added to the termination provision which states that payment will stop if alternative employment is found before the end of the notice period?

Answer: The law is not entirely clear on the first issue, but over the last few years there have been a number of court decisions finding that there is a duty on the employee to mitigate contractual notice, and the employee’s success in finding other employment can diminish the employer’s liability. Nonetheless, express words in the contract to that effect removes any continuing ambiguity and ensures that employees do not receive a “windfall.”

In Graham v. Marleau, Lemire Securities Inc., the Ontario Superior Court concluded that where there is an agreed-upon severance provision, the principle of mitigation still applies.