Definitions: Mitigation
Compensation earned from replacement employment following a wrongful dismissal is referred to as mitigation income. In a wrongful dismissal action, the amount that an employer owes an employee will usually be reduced to reflect any mitigation income earned during the employee’s notice period.1
For example, if a wrongfully dismissed employee would be entitled to $50,000 as pay in lieu of notice, but the employee has partially mitigated their losses by earning $10,000 from other employment during the notice period, then the employee will ordinarily only be awarded $40,000 as compensation for total lost earnings.
A wrongfully dismissed employee generally also has a duty to mitigate, which means taking reasonable steps to locate new employment.