Mitigation Evidence Cuts a Dismissal Claim by Two-Thirds

The situation

Huong and Linh ran a small supply business out of Richmond Hill, delivering cleaning products, linens and hygiene supplies to hotels and childcare centres across the region. It was a two-person operation at the top, with a handful of staff handling warehousing, deliveries and order coordination. One of those staff, Etienne, had worked as their warehouse and delivery coordinator for a little over three years, managing inventory and routing the delivery van three days a week.

The relationship soured over the final several months, as order volumes dropped and Etienne's performance slipped along with them: missed delivery windows, inventory counts that stopped matching what was on the shelves, and two written warnings that did not change anything. Huong and Linh eventually let him go without cause, meaning the termination was not based on misconduct serious enough to justify dismissal without any compensation, but simply a decision that the role and the fit were no longer working. They paid him the minimum notice and severance required under the Employment Standards Act, 2000, Ontario's baseline law setting out minimum notice periods, severance and other protections for employees, calculated using his three years of service.

Two months later, a demand letter arrived from a paralegal representing Etienne. It claimed the statutory minimum was not enough — that Etienne was owed reasonable notice under the common law, a separate and often larger entitlement built up through court decisions over decades, based on his age, length of service, position and the time it would reasonably take someone in his role to find comparable work. The letter demanded ten months' pay in lieu of notice, roughly $46,000, and warned that a Superior Court claim would follow if it was not paid within two weeks.

The legal problem

Huong and Linh had never been sued before, and the number on the demand letter was alarming for a business their size. The core legal problem was real: the Employment Standards Act sets only a floor. Employees who are dismissed without cause and without a valid, enforceable termination clause in their employment contract limiting them to the statutory minimums are generally entitled to reasonable notice at common law instead, and that figure is often several times larger than the statutory floor, particularly for longer-serving employees. Etienne's employment contract, drafted years earlier without legal help, did not contain a clause limiting his entitlement to the statutory minimum, so the higher common-law measure was genuinely in play.

What the demand letter did not account for, and what our team focused on immediately, was mitigation. An employee who has been dismissed has a legal duty to make reasonable efforts to find comparable new work, and any income earned from a new job during what would have been the notice period is generally deducted from the damages owed. This is not a technicality — it goes to the purpose of reasonable notice itself, which is meant to bridge the income gap while someone finds new employment, not to guarantee ten months' pay regardless of what actually happens next. A demand letter sent early in a dispute is written on the assumption that the person is still out of work. Whether that assumption holds up is often the whole case.

We advised Huong and Linh not to respond to the number in the letter at all until we knew Etienne's actual employment status. Paying based on an unverified assumption, or negotiating downward from an inflated opening demand without first testing it, tends to leave money on the table that a defence built on facts can recover.

What we did

1. Sent a measured response holding the position, not conceding the number. Rather than counter-offering against the $46,000 figure, our reply acknowledged that reasonable notice might exceed the statutory minimum but expressly reserved the right to reduce any award through evidence of mitigation, and asked Etienne's representative to confirm his current employment status. A quick concession at this stage would have anchored every later negotiation to the wrong starting point.
2. Investigated Etienne's post-termination employment through the proper channels. Once the matter moved toward a claim, our team used the formal steps available in litigation, including a request for productions and, later, an examination for discovery — a pre-trial process where each side is questioned under oath about the facts of the case — to ask directly about any new employment and income since the termination.
3. Uncovered that Etienne had started a new job within six weeks. Under oath, Etienne confirmed he had been hired as a hotel front-desk supervisor roughly six weeks after his termination, at an annual salary only modestly below his previous income. This single fact reshaped the entire claim: instead of ten months of lost income, the real gap was six weeks, plus a smaller ongoing shortfall from the pay difference between the two roles.
4. Recalculated the realistic exposure using Etienne's own numbers. We set out the arithmetic plainly for opposing counsel: roughly $6,900 in lost income for the six-week gap before the new job started, plus a modest running shortfall reflecting the difference between his old and new salaries, offset against the statutory minimum already paid at termination. The recalculated figure came to well under a quarter of the original demand, and we said so directly rather than simply offering a lower number without showing the math.
5. Made a formal settlement offer tied to the mitigation evidence. Once the new job and its salary were confirmed on the record, we made a without-prejudice settlement offer — a proposal made on the understanding that it cannot be used as evidence if the matter proceeds to trial — reflecting the recalculated exposure plus a modest allowance to close the matter without further legal costs on either side.

The outcome

Etienne's representative pushed back initially, arguing that the new position paid less and involved different duties, and that some further compensation was owed for the difference. That was a fair point in principle, and our recalculation had already built in an allowance for the pay gap rather than treating the six-week figure as the whole answer. After a further round of negotiation, the parties settled for a lump sum of about $13,000, inclusive of the residual pay difference and a contribution toward Etienne's legal costs, closing the matter without a Superior Court trial roughly five months after the original demand letter arrived.

For Huong and Linh, the outcome was as close to a clean win as an employer-side dismissal dispute gets. The final settlement came in at well under a third of the amount first demanded, and far below what a court might reasonably have awarded had Etienne genuinely remained unemployed for most of the notice period. The business avoided the cost, delay and uncertainty of a trial, and closed the file with a clear record of why the number landed where it did rather than a vague sense of having been talked down.

The result also illustrates something employers in Ontario often misunderstand about wrongful dismissal exposure: the initial demand is frequently calculated on a worst-case assumption about how long the former employee will stay out of work, because that assumption is the only one available at the time the letter is sent. It is not evidence of what actually happened. Employers who respond to that number as though it were fixed, rather than testing it through the discovery process, routinely pay more than the facts justify.

What you can learn from this