So says the Ontario Court of Appeal in Bowes v Goss Power Products Ltd, 2012 ONCA 425, where the contract of the employee in question said he was entitled to 6 months’ notice or payment in lieu but was silent on his need to mitigate damages. He was terminated without cause and found a new job 2 weeks later. The old employer paid him no more than the 3 weeks’ pay required by statute, arguing he’d lost only 2 weeks and had a duty to mitigate any damages suffered; the employee claimed he was entitled to the full payment set out in the agreement and had no duty to mitigate.
The trial judge agreed with the employer, but the Court of Appeal reversed. Where the parties have agreed to a fixed sum on termination, they have contracted out of the requirement for reasonable notice or damages in lieu. The specified amount represents liquidated damages and mitigation (which relates to damages which are at large, i.e. in lieu of reasonable notice) is not required. The intention of the parties was certainty on termination, and it would be unfair to allow the employer to undermine that certainty by seeking to pay a smaller amount than agreed and to require mitigation on the part of the employee that was not contemplated in the original bargain.
[Link available here].