Ontario Court Of Appeal Offers Clarification On Post-employment Earnings And Employers’ Evidentiary Burden In Mitigation Analysis

Key takeaways

In a decision that offers welcome clarity on a previously unsettled issue in Ontario employment law, the Ontario Court of Appeal in Williamson v. Brandt Tractor Inc., 2026 ONCA 272 (Williamson), has confirmed that amounts earned by an employee during the common law reasonable notice period from a “lower paying or ranking position” must generally be deducted from the damages owing to that employee. However, Williamson also sets out the high evidentiary burden involved in the mitigation analysis, marking it as a “mixed bag” decision for employers.

Background and decision

At the time of termination, the employee in Williamson was working for the employer as a salesperson. Following his termination, the employee did not seek a comparable sales role, instead accepting a significantly lower-paying job driving a parts vehicle. In doing so, the employee testified that he wanted a career change and was content with his new position.

At trial, the Ontario Superior Court of Justice held that the employer wrongfully dismissed the employee and awarded him damages for the 17-month common law reasonable notice period. The trial judge refused to deduct the amounts earned by the employee at his new job during the notice period from the damages owing to him because they were earned in a “lower-paying or ranking position”. The trial judge relied on K.N. Feldman J.A.’s concurring opinion in Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402 (Brake), which stated that, where a wrongfully dismissed employee is “effectively forced to accept a much inferior position because no comparable position is available, the amount she earns in that position is not mitigation of damages and need not be deducted from the amount the employer must pay.”

The Ontario Court of Appeal overturned the trial judge’s analysis, holding that, subject to “additional circumstances,”¹ the law in Ontario generally requires all employment income earned during the notice period to be treated as mitigation of loss. Accordingly, the Court of Appeal deducted the $32,881.43 earned by the employee during the notice period in his new job from the 17 months’ pay in lieu of notice to which he was otherwise entitled.

Insights on the duty to mitigate from B.C.: Zoehner and the obligation to accept non-comparable employment

The Court of Appeal’s reasoning in Williamson is not unique to Ontario. In Zoehner v. Algo Communication Products Ltd., 2023 BCSC 224 (Zoehner), the Supreme Court of British Columbia considered a similar issue regarding the effect of earnings from non-comparable employment on the duty to mitigate.

In Zoehner, the Supreme Court of British Columbia held that the plaintiff — who worked for one employer for his entire career and made plain his intention to retire soon — did not discharge his duty to mitigate by failing to make any genuine efforts to obtain reasonable alternative employment. The Court held that, despite the low likelihood of finding comparable employment, it would have been reasonable and consistent with the duty to mitigate for the employee to seek work at a lower salary or for a limited term to offset his damages. The Court accordingly discounted the 24-month notice period to 19.2 months.

The Williamson and Zoehner decisions are complementary in that they establish that earnings from non-comparable employment may offset wrongful dismissal damages. However, the facts are different in one key respect. In Zoehner, the Court held that employees unlikely to find comparable work during the notice period may need to seek non-comparable employment to fulfill the duty to mitigate. Williamson, by contrast, does not address whether employees are required to seek out employment in a “lower-paying or ranking position”. Instead, it confirms only that if an employee earns amounts from such employment during the notice period, those amounts will generally be deducted from the damages award.

Williamson: the bad news

While Williamson offers helpful clarity on mitigation earnings, it is not entirely favourable for employers. Specifically, Williamson underscores the evidentiary challenge employers face in proving that an employee failed to discharge the duty to mitigate. In its reasons, the Court of Appeal affirms that, even where employees expressly admit they did not take any steps to obtain comparable alternative employment, the employer remains under a burden to establish that, in fact, such work was available and, had the employee taken reasonable steps, the employee would likely have secured a comparable position. In practice, this is a difficult burden to meet. Evidence of the employee’s mitigation efforts lies almost exclusively in the employee’s own hands, yet employers are required to prove not only what the employee did not do, but also what the job market would have yielded if the employee had done it.

The Court of Appeal’s strict reliance on the employer’s ability to produce job market evidence makes Williamson notably less helpful to employers than Zoehner. Rather, Williamson suggests that Ontario courts may be reluctant to discount damages owing during the notice period unless the employee earns employment income during the notice period, even where the employee makes little or no effort to find work. Accordingly, Williamson is another example of divergence between employment law in Ontario and British Columbia to the detriment of employers.

Practical advice for employers

In light of Williamson, employers should, during settlement negotiations or litigation, request complete information about any employment income earned during the alleged common law reasonable notice period, including income from non-comparable work, as it may reduce their legal exposure. However, Williamson also highlights that employers should build an early evidentiary record of the employee’s mitigation efforts and available alternative employment, including through job-market searches and requests for information about the employee’s job search, which may assist employers to meet the high evidentiary burdens imposed by Ontario courts.

Footnote

1. Notably, the Court of Appeal does not clarify what these “additional circumstances” entail.