Understanding Duty to Mitigate After a Termination (From an Employment Lawyer)

If you’re researching “duty to mitigate,” there’s a good chance you’ve been terminated without cause and handed a termination package mentioning a “duty to mitigate losses.” First and foremost, I’m sorry you’re going through this. As an employment lawyer who’s worked with hundreds of terminated employees, I know how stressful this time can be.

Important to note: If you’re unsure about any part of your termination offer, do not sign it before speaking with an employment lawyer.

Key takeaways from this post

• Duty to mitigate essentially means that you must make reasonable efforts to find a new job after termination; otherwise, your severance or damages could be reduced.
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• The courts don't view severance as a punishment for the employer or damages for you – it’s temporary financial support until you secure comparable work.
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• If you pursue a claim (e.g. wrongful dismissal), be prepared to show proof that you’ve been actively job hunting.
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• The scope and structure of your duty to mitigate can differ from one termination package to another, so you should always read the fine print.
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• Talk to a lawyer before signing any termination or severance offer to clarify your rights and obligations.

Note: Every situation/contract/termination/severance package is unique, so please consult with an employment lawyer to discuss your matter. This post includes legal information but is not legal advice.

What does “duty to mitigate” mean in a termination or severance offer?

In simple terms, the duty to mitigate means you must take reasonable steps to find a new job after being let go. The law views severance or pay in lieu of notice as a bridge until you find new work, not as compensation for being fired.

• If you don’t look for work, or turn down suitable positions, the courts can reduce your compensation because you failed to minimize your own losses.
• On the flip side, if you land new employment faster than anticipated and your severance offer includes a duty to mitigate, your employer may claw back a portion of your severance.

Why is severance seen as a bridge and not damages for being fired?

When I explain mitigation, many clients ask, “Why am I being punished for finding new work?” I empathize with this feeling, as being terminated without cause can be traumatic.

Unfortunately, it’s a common misconception that severance is a form of damages or compensation for being fired. In reality, severance exists to support you financially while you transition to your next opportunity.

How courts view the duty to mitigate

If you file a claim for wrongful dismissal, the court will expect you to show that you’re actively seeking new employment. Here are three scenarios illustrating how mitigation might apply in a claim:

1. You find a new role sooner than expected
   The courts see severance as financial bridge during the time you’re unemployed. If you secure comparable work quickly, and your severance offer includes a duty to mitigate, your employer can reduce or claw back part of the payment. You may also be awarded less money in court because you’re no longer out of work.
   
   
2. You're not attempting to mitigate your losses
   It's important to document your job search, because the courts want to see that you're mitigating your losses. If, for example, you don't have records of your job applications or you rejected a similar role without a valid reason, this can hurt your case.
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3. Reasonable efforts vs. any job
   The courts do not expect you to take a role that’s significantly below your skill level or salary. They only require reasonable efforts to find a position similar to the one you lost.
   

It’s important to note that “duty to mitigate” can vary from one offer to another.

Examples of duty to mitigate in severance offers

• Scenario One: You receive pay in lieu of notice and severance totalling 6 months. Your offer states that if you find new employment at any point during those 6 months, your employer will claw back 50% of your remaining severance. This clause directly ties your severance to the “duty to mitigate.”
• Scenario Two: Your employer does not include a duty-to-mitigate clause in your offer. This can act as an incentive for you to sign the release, because you will not face any claw-backs if you find work quickly. However, many employees then grapple with whether they should seek a longer notice period – even if that means a duty to mitigate – or accept the offer as is simply because it omits mitigation requirements.

Next steps: Talk to an employment lawyer before signing

Every termination situation and offer is unique. If you’re unsure about your severance package, worried it’s not enough, or simply want to understand your obligations, consult with an employment lawyer. Legal guidance can help you:

• Secure a fair severance package or notice period
• Understand how finding new work impacts your entitlements
• Give you peace of mind especially as you close this chapter in your career

At Kompa Law, we can review your termination package, advise you on next steps, and explain how the courts typically view mitigation. Contact us today to discuss your situation and protect your rights. With the right support, you can move forward confidently toward your next opportunity.