- The purpose of notice, or pay in lieu of notice, is generally to bridge the gap between your old job and reasonably comparable new employment — not to give you both a full notice payout…
- If you're on working notice — still employed and being paid by your former employer — and you accept a new position before the working notice period ends, the timing needs care.
- If your former employer already paid you a lump sum covering the notice period (rather than through instalments), finding a new job afterward doesn't typically require you to pay any of…
Landing a new job quickly after being let go feels like unambiguously good news — and mostly, it is. But if you're still within the notice period your former employer owes you, that new income can change the math on what you're ultimately entitled to collect. Understanding how a new job during a severance notice period interacts with your Ontario claim helps you avoid an unpleasant surprise.
Why New Income During the Notice Period Matters
The purpose of notice, or pay in lieu of notice, is generally to bridge the gap between your old job and reasonably comparable new employment — not to give you both a full notice payout and a new salary stacked on top of it with no adjustment. Because of this, income you earn from new, comparable employment during the period your former employer's notice obligation covers is generally deducted from what is still owed.
Scenario 1: You're Still on Working Notice and Get a New Job
If you're on working notice — still employed and being paid by your former employer — and you accept a new position before the working notice period ends, the timing needs care. Resigning early can affect your outstanding entitlement in ways that aren't always obvious, so it's worth getting advice before you give notice to your current (soon-to-be-former) employer.
Scenario 2: You Already Received a Lump-Sum Pay in Lieu
If your former employer already paid you a lump sum covering the notice period (rather than through instalments), finding a new job afterward doesn't typically require you to pay any of that lump sum back on your own — but if the amount paid was disputed, under negotiation, or the subject of an ongoing claim for a longer notice period, your new income can still factor into how a court or the parties value the remaining claim.
Scenario 3: Your New Job Pays Less Than Your Old One
If the new position pays less than what you were earning before, the offset generally reflects only what you're actually now earning, not some assumed full replacement of your old income — the shortfall between the two can remain part of your claim, since the purpose of mitigation is to reduce damages by what you've genuinely recovered, not to erase the claim outright.
What This Generally Means in Practice
| Situation | General Effect |
|---|---|
| New comparable job starts partway through the notice period | Income earned during the remaining notice period is generally credited against what's still owed |
| New job pays less than the old one | The pay gap can often still be claimed, subject to the specific facts |
| New job is not genuinely comparable (very different role or seniority) | May not offset the claim the same way — a fact-specific question |
| Lump-sum pay in lieu already fully received and undisputed | New employment afterward typically doesn't require repayment on its own |
Practical Tips for Handling the Transition
- Tell your lawyer about a new job offer or start date as soon as it's realistic, before you accept or sign anything with the new employer.
- Keep clear records of your new salary, start date, and role so any offset calculation is accurate.
- Don't assume you have to disclose a job search that hasn't yet produced an offer — the relevant fact is income actually earned, not effort alone (though effort matters for your duty to mitigate).
- If you're still negotiating with your former employer when the new job comes through, loop your lawyer in before responding to any settlement offer.
Frequently asked questions
Do I have to tell my former employer that I found a new job?
If you're still in an active negotiation or legal proceeding over your notice entitlement, disclosure is usually expected and can matter to the outcome. Talk to your lawyer about timing and how to handle the disclosure appropriately.
What if I find a new job right after receiving my full pay in lieu, with no dispute?
If the amount was fully paid, undisputed, and not the subject of an ongoing claim, finding new work afterward typically does not require repaying any of it. This differs from a situation where you're still pursuing a larger claim for additional notice.
Does starting my own business instead of taking a job count the same way?
It can be more complicated, since self-employment income and business investment don't map onto a straightforward "new salary" the way a job offer does. This scenario benefits from specific legal advice rather than general assumptions.
Can my former employer refuse to pay anything once they hear I have a new job?
No — even where mitigation income reduces the amount owed, your former employer generally cannot simply refuse to pay altogether without properly accounting for what is genuinely still owed after any offset.
This is a litigation question
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