In a recent decision, Chief Justice Winkler of the Ontario Court of Appeal held that where an employment agreement specifies the amount payable to an employee on termination of employment, whether fixed or readily calculable, the parties have contracted out of the common law "reasonable notice" approach. The employee will therefore have no duty to mitigate damages unless mitigation is expressly required by the agreement.
Chief Justice Winkler also held that where there is a broad release in an employment agreement, such a release demonstrates an intention to avoid litigation and confirms a desire for finality, bolstering a finding that the parties intended mitigation would not be required unless expressly stated in the agreement.
Employers wishing to oblige an employee to mitigate and thereby potentially reduce the amount to which an employee is entitled on termination as expressed in an employment agreement, the employment agreement must expressly state that the termination entitlement is subject to the duty to mitigate.
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