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1 Humphrey v. Mene Inc., 2022 ONCA 531 2 Pakozdi v. B&B Heavy Civil Construction Ltd., 2018 BCCA 23 3 Gula v. Freed Developments Ltd., 2020 ONSC 6463 Contractual notice terms and the duty to mitigate The duty to mitigate arises out of general contract law and is not unique to employment matters. Courts have generally held that if an enforceable termination clause sets out an employee's entitle- ment on termination, and there is no express requirement to miti- gate, it is presumed the parties have agreed the employee is entitled to the full contractual amount. To rebut this presumption, the ter- mination clause should include an express requirement to mitigate. In a 2020 decision of the Ontario Superior Court of Justice, 3 an employee's termination clause entitled him to 11 months' notice, without any mention of a duty to mitigate. The court held that the employee was entitled to that full amount, despite the fact the employee had found new employment and fully mitigated within the contractual notice period. The amounts earned in the new employment were not deducted from the award. According to the court, "having contracted out of the common law by specifying the notice period, or pay in lieu of notice, if the applicant were to be terminated without cause, the employment contract making no reference to mitigation, the applicant was under no duty to miti- gate his damages." Takeaways for employers The duty to mitigate is an important tool to both reduce an employ- er's potential liability and create leverage. Best practice is to ensure your organization's employment agreements and termination pack- ages are reviewed by experienced employment counsel and the duty to mitigate is addressed. An employment agreement should also require an employee to seek the employer's consent before engaging in any side hustle. There are many reasons for this, including to ensure there is no con- flict of interest and the employer is aware of the secondary income. At the very least, an employee should be required to disclose such secondary income. Finally, it is almost always in the parties' best interests that the employee find comparable income replacement as soon as possible. Consider providing a positive letter of reference (to the extent possi- ble) and forwarding to the former employee any information regard- ing comparable work. This will help the employee to find new work, and create an evidentiary record that comparable work was available at the relevant time. The information contained in this article is provided for general information purposes only and does not constitute legal or other professional advice, nor does accessing this information create a lawyer-client relationship. This article is current as of August 10, 2022, and applies only to Ontario, Canada, or such other laws of Canada as expressly indicated. Information about the law is checked for legal accuracy as at the date the article is prepared but may become outdated as laws or policies change. For clarification or for legal or other professional assistance, please contact Sherrard Kuzz LLP. Matthew Badrov and Priya Sarin are lawyers with Sherrard Kuzz LLP, one of Canada's leading employment and labour law firms, representing employers. Matthew and Priya can be reached at 416.603.0700 (Main), 416.420.0738 (24 Hour) or by visiting www.sherrardkuzz.com. C A N A D I A N L AW Y E R M A G A Z I N E 2022-23 TOP Labour & Employment BOUTIQUES At Sherrard Kuzz LLP we collaborate with our clients to anticipate and avoid human resources problems. We know proactive steps today will prevent Murphy's Law tomorrow. From human rights to health and safety, and everything in between… If you're an employer, we're the only call you need to make. sherrardkuzz.com | 416.603.0700 250 Yonge St #3300, Toronto, ON M5B 2L7 @sherrardkuzz 24 HOUR 416.420.0738