Mitigation issues can save an employer months of termination pay and/or gut your termination case, depending on whether you are the employer or employee in a dispute.

But what exactly is mitigation? This post sets out the basics.

What is Mitigation?

In Canadian employment law, mitigation refers to the legal obligation of an employee who has been terminated or laid off to make reasonable efforts to find comparable employment. This principle of “mitigating damages” is used to reduce the potential compensation or termination package an employer may be required to pay.

For instance, if an employee is terminated and they find a new job within a short period, the courts will set off the new income from the amount that previous employer may be required to pay because the employee has mitigated their loss of income.

What Counts as Mitigation?

What constitutes “reasonable efforts” and “comparable employment” can vary greatly depending on the circumstances, such as the employee’s age, education, experience, and the availability of suitable jobs.

Mitigation includes:

1. Actively seeking new employment: This could involve applying for jobs, attending interviews, networking, etc.

2. Accepting a reasonable job offer: If a comparable job is offered, the employee is generally expected to accept it.

3. Undergoing retraining or upgrading skills: In some cases, the employee may be expected to take courses or undergo training to improve their employability.

4. Documenting job search efforts: The employee may need to provide evidence of their job search efforts, such as records of job applications or interviews.

5. Self-employment or freelance work: In some cases, efforts to start a business or work as a freelancer may count as mitigation.

If the employee fails to mitigate their losses, it may result in a reduction of their wrongful dismissal damages.

How does Mitigation Impact Your Employee’s Termination Package?

In Canada, when an employee is terminated without cause, they are generally entitled to a termination package. The impact of mitigation on an employee’s termination package can be significant. If the employee finds a new job quickly, the amount of their termination package may be reduced. This is because the purpose of the package is to compensate the employee for their loss of income during the period of unemployment. If the employee is able to mitigate their loss by finding new employment, their need for compensation is reduced.

For example, if an employee is entitled to a termination package that includes 6 months of pay, but they find a new job after 2 months, they may only receive 2 months of pay from their termination package. The remaining 4 months would be considered mitigated by the new employment.

However, it’s important to note that the duty to mitigate does not require the employee to accept any job that comes along. The new job must be comparable to the one they lost in terms of pay, location, hours, and other factors.

In some cases, the employment contract or the termination agreement may specify whether and how the termination package will be affected by mitigation. Also, it’s important to note that in all cases no employer can pay out less than what is required under their applicable employment standards legislation, regardless of any contractual or termination package terms.

When proceeding with a termination, employers will want to keep this important legal concept on their radar and include mitigation terms within the termination settlement documents.  Need a hand in contract drafting, reach out to our team today! 

Employers have another reason to worry about their termination clauses. 

Following the case of Waksdale v Swegon North America Inc., 2020 ONCA 391, Ontario courts have placed increased scrutiny on termination clauses with very few surviving.

Continue Reading Another Termination Clause Bites the Dust

The dust has settled post-pandemic and employees are out of sorts. Turnover is high across all industries as people regroup and sort through what they want out of their careers.

We regularly hear about employees resisting commuting, moving on quicker than ever when the job gets difficult, and when regular feedback gets uncomfortable.

Continue Reading Exiting Employees on a Disability Leave
Wage Deductions: Ontario Law Explained

Nobody wants to receive a paycheque that’s smaller than they were expecting, but sometimes, wage deductions are necessary. So, when can an employer make deductions from an employee’s wages? In Ontario, the Employment Standards Act, 2000 (ESA) provides guidelines regarding what deductions are permissible, in order to protect employees and their earnings. 

Employers are generally not allowed to withhold wages that an employee has earned, make a deduction from an employee’s wages, or cause an employee to return their wages to the employer. However, this general prohibition is subject to a few key exceptions. 

When can an employer make deductions from an employee’s wages?

Employers can generally make deductions from employees’ wages in three circumstances: 

  1. Deductions authorized by statute or court order 

The ESA permits certain deductions from employees’ wages, such as income tax, CPP and EI contributions, and court-ordered garnishments. Employers must ensure that deductions fall within the authorized categories stipulated by the ESA or other relevant legislation.

  1. Deductions for overpayments

When an employee is overpaid because of a true administrative error, i.e. the payroll department accidentally pays them twice for the same pay period etc. then these are amounts that an employee was not entitled to in the first place, and therefore are not considered “wages” under the ESA and are not subject to the same strict rules regarding deductions from wages. 

However, employers should not apply this principle too broadly. For an amount to be considered an overpayment, it must have been truly made in error. For instance, if an employer decides to pay an employee for a leave of absence when they are not required to do so by contract or statute, and then the employer later changes their mind and wants to deduct this amount from an employee’s wages, this would not be permitted as it is not a true overpayment. If an employer voluntarily provides an employee with a greater right or benefit, they cannot later characterize it as an “overpayment” in an attempt to get it back from an employee. 

  1. Deductions with written authorization 

Employers can make deductions from an employee’s wages when the employee provides a written statement authorizing the deduction. The written authorization must either specify the amount of money to be deducted or, provide a method of calculating the specific amount of money to be deducted. 

An oral authorization or a general statement or “blanket authorization”, for example in an employment contract, that purports to allow an employer to make deductions from an employee’s wages, will not be sufficient to permit a deduction from wages. 

When can an employer not make deductions from an employee’s wages?

Even where an employee provides written authorization, there are certain instances where employers are prohibited from making deductions from an employee’s wages. 

Employers are not allowed to make deductions from an employee’s wages for “faulty work” i.e. an employee’s mistake in processing a cash transaction or an employee accidentally damaging a piece of equipment. 

Employers cannot make a deduction from wages if the employer has a cash shortage or has had property lost or stolen when an employee did not have sole access and total control over the cash or property that was lost or stolen. 

Employers also cannot make deductions that would bring an employee’s wages below the minimum wage rate.


Employers should tread carefully when considering deductions from employee wages. Even when technically allowed, deductions can significantly impact morale and strain employee relations. Deductions, particularly if unexpected or unusual, are very unlikely to be well received by employees. Compliance with the ESA is crucial to avoid employment standards complaints and ensure fairness to employees. Clear communication, detailed record-keeping, and understanding of the rules are essential. Employers should prioritize transparency and fairness to cultivate a positive work environment. 

Contact us today to ensure compliance with the law while fostering a harmonious workplace environment.

As lawyers who practice for both employers and employees, we know that terminations are rarely pleasant for anyone involved.

After all, as the Courts have acknowledged, employment is an essential component of identity, self-worth and emotional well-being. More recent Court rulings have reminded us that the manner in which employment can be terminated is equally important and impactful to the employee as the employment once was.

With the importance of employment and the impact of termination well established, what can employers do to ensure the termination process is as smooth as possible? One step that may come as a surprise to some employers is the importance of issuing a termination letter that is clearly written and easy to understand. This will help your employee grasp what happens next. Additionally, if they decide to retain a lawyer, a clear letter will likely help reduce the number of back and forths (and therefore fees) your legal counsel incurs merely addressing the details of the termination. 

Here are some key tips and takeaways to consider when drafting a termination letter:

  1. Understand the moment: The chances that the employee will remember the details of the termination delivered during the termination meeting are slim to none. For most employees, this news is shocking, difficult to digest and very overwhelming. Those emotions are typically not conducive to understanding, accepting and remembering the details of what will follow. This makes the termination letter all that more important. 
  2. Understand who is reading the letter: When drafting the letter, keep your audience in mind. You’re speaking to your recently terminated employee, not a lawyer. Writing a dense letter or one littered with legal jargon will add further confusion and overwhelm an already very stressed-out individual. Write in plain language and short sentences, don’t be afraid to use spaces, new paragraphs or numbers/bullet points to make it easier to read and understand. In case it wasn’t already obvious, don’t include latin terms in your letter that even lawyers will have to look up. 
  3. Be detailed: At the very least, address each of the employee’s entitlements upon termination, even if the best information you can provide is a promise that the applicable plan provider will follow up. For example, you may not be able to tell your employee what will happen with their pension following termination but you should explain who will be in touch to provide those details. 
  4. Ensure those details comply with applicable legislation: Before drafting your termination letter, make sure you understand what your employee is legally entitled to. For example, ensure you understand the basic entitlements owed to employees under minimum standards legislation like the Employment Standards Act. These entitlements range from monetary entitlements, ongoing vacation pay entitlements post-termination and timelines for payment. 
  5. Post-termination obligations: The termination letter may be your last opportunity to remind the employee of their post-termination obligations. These sorts of obligations can range from requirements regarding confidentiality to promises made in the original employment contract regarding solicitation. Don’t forget to remind the employee to return all company property. 
  6. When in doubt, consult a lawyer: beyond knowing what legal points should be addressed in the termination letter, striking the right tone, and addressing the right points in the termination letter can truly be an art. Termination letters are just some of the bread and butter of our work; chances are getting in touch and chatting will help you set things off on the right foot. Need some assistance? Find us here

Important update for all federal employers! Amendments to the Canada Labour Code are now in force as of February 1, 2024. Do you fall into this category? And if so, what does this mean for you? 

Federal Employers

As we’ve discussed in a previous blog, the Canada Labour Code is a federal law which sets out minimum employment standards for sectors that fall under federal power.

Continue Reading Update for Federal Employers: Canada Labour Code Amendments – Now in Force, as of February 1, 2024

Each year, our law firm goes out of town and spends a couple of days together in a big AirBnB planning the year, iterating and optimizing our systems, identifying pain points and ways to improve our client service delivery, and developing our legal skills.

Continue Reading Building Our Team: Why I Love Our Annual Retreat

During 2023, we saw the Ontario Court of Appeal uphold two decisions awarding notice periods beyond what was believed to be the “24-month cap” at 27 and 30 months respectively.

In another recent Ontario decision, the Court awarded 5.5 months of pay in lieu of notice to an employee with only 5 months of service prior to dismissal, which is significantly higher than the “one month per year” rule of thumb. These decisions create uncertainty for employers given the wide range of potential liability arising from wrongful dismissal claims. Fortunately, there are proactive measures employers can take to avoid this liability. 

Continue Reading Uncertainty on Both Ends of the Common Law Notice Spectrum


Woohoo!  Mandatory policies, postings, training, legally enforceable contracts… Actually, no client has ever told us they LOVE thinking through legal compliance for their workplace. Rather, it’s the thing you have to do on top of the other revenue-generating tasks to keep the lights on. 

For owner-operator employers, there is often no one to delegate this to. The internet is full of best practices and comprehensive lists of what to do, but it all eats up your time to figure out.

How to cut through the noise? What HR law compliance tasks must get done today to be legally compliant, and the nice-to-haves when you can in a quarter or two?

We advise our employer clients frequently on how to sort through the mandatory essentials, the things that will get you in trouble with the Ministry of Labour if you fail to comply. As you grow your business and bring on more people to do the additional layers, you can build on that foundation of compliance.

Where To Start?

  • Policies: There are a collection of workplace-related statutes that set out certain policies every Ontario employer must have. Examples include anti-harassment and violence policies, accessibility policies, and certain Employment Standards Act policies.
  • Postings: Ontario employers are required to post certain materials from the government in their physical and/or virtual workplace.
  • Training: Depending on your size and industry, employers have mandatory training obligations
  • Reporting: Also depending on the size of your workplace, there may be certain reporting obligations around accessibility.

In addition to the legal compliance mandated by the government, there are two highly recommended areas to frontload when getting your compliance house in order:

  • Anti-Discrimination: Rolling out an anti-discrimination policy is a critical due diligence step should you receive a claim of discrimination from an employee, as well as a tool of communication to your workplace about your standards of practice to hopefully minimize discrimination claims in the first place.
  • Contracts: Drafting and implementing employment contracts with an enforceable termination clause will not only set out clear job expectations with your candidates and team, but will also be the primary document you lean on in the rising wrongful dismissal cases. A good termination clause can manage expectations and contain the broad packages that many owner-operators find very difficult to afford. 

Much of the content for these compliance steps is common from one workplace to another, but not all. Having the documents capture your workplace’s unique practices will strengthen your legal compliance. Practically, having the core policies, contracts and mandatory compliance steps in place will communicate expectations to your team in a clear and relevant manner.

How We Can Help You Save Time

Too busy to sort through all the details?  Lack the resources or enthusiasm to sift through the mandatory obligations and just want it done as efficiently as possible? 

The overwhelm is real for many of our clients. It’s why we built our 2024 HR Law Compliance Program

If you need a hand identifying the roadmap and setting out an efficient roadmap for your 2024 HR law compliance, we can take the weight off your plate. We will do the heavy lifting for you, stagger out the workplace throughout the year to make it manageable for you, and check in with you once a quarter with a 1:1 compliance coaching call to help you stay on track. We charge a flat fee so there are no surprises over the year of implementation. We want this easy for employers.

We are employment lawyers who actually enjoy this HR law compliance stuff and can cut through the noise for you, giving you confidence you are on track and relief that it’s getting done without eating up all your bandwidth. Come to our website or email us at welcome@springlaw.ca for more details.

When bringing people in to work with your business, the distinction between an “employee” and an “independent contractor” is not just an administrative detail; it carries significant legal implications, particularly in the realms of tax and employment law.

If a court, the Ministry of Labour, or the Canada Revenue Agency (CRA) finds a worker has been “mischaracterized” by being treated as an independent contractor when they are an employee, this can have serious and expensive implications. 

Continue Reading Navigating the Legal Distinction: Employee vs. Independent Contractor Relationships