Mitigation in wrongful dismissal: Court of Appeal raises the bar for employers

When a long-serving employee is dismissed, the law requires them to take reasonable steps to look for new work. This is called the “duty to mitigate.” But what happens when an employer argues that the employee didn’t try hard enough? The Ontario Court of Appeal recently gave a clear answer in Pateman v. Koolatron Corporation, 2025 ONCA 224.

The Background

Mr. Pateman worked at Koolatron for 29 years. When his employment ended, the company suggested he had “retired.” He disagreed and sued for wrongful dismissal.

At trial, the judge sided with Mr. Pateman and awarded him 24 months’ pay in lieu of notice. However, the judge reduced the award:

• 3 months were deducted for alleged failure to mitigate, and

• 2.5 months were deducted for actual working notice.

Both sides appealed — the employer wanted the award reduced further, while Mr. Pateman challenged the mitigation deduction.

The Court of Appeal’s Decision

The Court of Appeal dismissed Koolatron’s arguments and allowed Mr. Pateman’s cross-appeal.

• Termination, not retirement: The Court rejected the idea that Mr. Pateman had voluntarily retired. The employer’s own paperwork — including the Record of Employment citing “shortage of work” — supported termination.

• No deduction for mitigation: The Court confirmed that an employer who claims an employee failed to mitigate must prove two things:

  • The employee didn’t take reasonable steps, and

  • Better efforts would have likely led to comparable employment.

    Koolatron couldn’t show either. A vague offer of part-time work wasn’t enough.

• Math correction: The Court also fixed a calculation error, increasing the damages.

The end result? Mr. Pateman’s award went up, not down.

Why This Case Matters

This decision reinforces a vital point: the burden of proving failure to mitigate rests entirely on the employer. Courts won’t cut an employee’s damages without solid proof that better job search efforts would have made a difference.

For employers, this means you can’t simply speculate that someone should have found work sooner. You need evidence of available, comparable jobs and a real likelihood the employee would have secured one. For employees, it’s a reminder to keep records of your job search — but also reassurance that courts take a practical view of the challenges of re-employment after a long career.

The Takeaway

Termination damages exist to protect employees during a vulnerable period. Employers who want to reduce those damages face a high bar, and casual or half-hearted offers won’t do