Post-employment earnings and mitigation

As frequently happens when the Superior Courts attempt to develop well-established common law principles in a way to do justice to the facts of a particular case, the creation of confusion rather than clarity among lawyers is the consequence.

It is an entrenched principle of course contract law that a plaintiff alleging breach of contract has a duty to mitigate damages. In employment law, this means that an employee suing for wrongful dismissal has a duty to seek out alternative employment. The general rule is that any income by an employee from alternative employment during the notional notice period is deducted from an award of damages.

Last year the SCC held that earnings by an employee suing for wrongful dismissal do not count towards mitigation and are not deducted if the employee would have made those earnings anyway, as where the employee had been holding down two jobs at the time of her termination and continued to earn income from the other job. This was held not to be replacement income. This decision does not otherwise affect the general principle. For example, as the BC Court of Appeal recently confirmed, extra earnings, earnings that the employee would not have made but for the termination by the employee during the notice period were indeed to be deducted from the damage award.