Mitigation refers to making one’s situation less severe after a breach of contract. For instance, if a building's tenant skips out on their rent, the landlord can't leave the unit vacant for years and go after the tenant for all of that lost rent. The landlord must try to rent the unit to someone else.
An example in the employment realm is a fired employee who mitigates their damages from a Wrongful Termination by finding a new job. A fired employee cannot simply put their feet up and then go after their boss for the wages they're losing. Instead, they have to make a reasonable effort to look for work. By finding a new job, the terminated employee mitigates their losses, and also reduces any damages to which they would be eligible from their former employer.
There are several principles in mitigating one’s damages:
1. The first and most important principle is that the Plaintiff (employee) must take all reasonable steps to mitigate the loss.
2. The second principle states that the Plaintiff is able to recover for the loss incurred when reasonable steps were taken to avoid the loss. In other words, if you tried to mitigate your losses through reasonable efforts to find a job, but were unsuccessful, you will not be penalized.
3. The last principle is when the Plaintiff has taken steps to mitigate the loss, and these steps are successful, that the Defendant (employer) is entitled to benefits accruing from the Plaintiff and is therefore only liable for the reduced amount of the loss.
Essentially, the employee is required to mitigate their losses, and make all reasonable efforts to do so. The former employee cannot claim both a payout and find a new job, and thereby be better off than they would have been if they continued to be employed by their former employer.
Note that it remains the Plaintiff’s responsibility to show that they have mitigated their damages by keeping records of their efforts to do so.
