When you sue your ex-employer for wrongful dismissal damages, the court, in assessing those damages, will usually deduct from your award any amount you did earn or should have earned if you applied yourself to find a new job. This is referred to as the employee’s duty to “mitigate” damages. This is often not the case where your written employment contract provides for a set severance payment in the event of dismissal not for cause.
What you actually did earn will be fairly easy to assess. It is more difficult to argue what you should have earned if you had made the required efforts.
In order for there to be any deduction from the total amount you would have been paid during a reasonable notice period on account of money you “should have earned”, there must be evidence before the court which persuades the court that: (1) you did not do everything you ought to have done to try to get other work and (2) that if those additional steps had been taken, earnings would have been generated to reduce your damages. In a wrongful dismissal action, the “onus” is on the employer to bring forward persuasive evidence of both factors, which are difficult to prove.
If fired (ie. terminated without notice, or reasonable notice), the employee should do whatever is reasonable to try to find a roughly equivalent job. Normally, it would be reasonable to look for a similar job without taking a material step down in either level of responsibility or pay and benefits. Courts would not normally require an employee to accept a significant career setback in mitigation. Depending on the circumstances, mitigation might legitimately involve retraining or involve the employee pursuing a new career, or a new business. The question the Court should address is: did the employee take action to do what was the right thing for him or her to try to get back to a similar sort of job or earning level.
In most wrongful dismissal claims, it is important that employees take steps to mitigate, and that they carefully document their efforts (by keeping documents showing searches, interviews, applications etc. and perhaps a journal) in that regard so that they can tender evidence at a trial.