The Obligation to Accept Re-Employment with the Former Employer
The Supreme Court of Canada held in its 2008 decision Evans v. Teamsters Local Union No. 31.1 that dismissed employees may be obliged to return to work for their former employer in order to mitigate the damages they suffered as a result of their dismissal.2 Since Evan, various decisions of provincial appellate courts have interpreted Evans very narrowly, limiting the circumstances when a dismissed employee will be expected to accept re-employment in order to mitigate his or her damages.
In Evans, the plaintiff had been dismissed without cause after being employed as a business agent for the Teamsters union for 23 years. Immediately after the plaintiff’s termination, the parties began negotiating the plaintiff’s notice period. The plaintiff’s position was that he was owed 24 months’ pay in lieu of reasonable notice. No agreement was reached but the union continued to pay the plaintiff’s salary and benefits.
Four months after being terminated the plaintiff received a letter from the union’s legal counsel requesting that he “return to his employment … to serve out the balance of his notice period of 24 months” and stating that, if he refused to return, the union would “treat that refusal as just cause, and formally terminate him without notice”. The plaintiff indicated he would return to work only if the Teamsters immediately rescinded its termination letter. The Teamsters refused and took the position that the plaintiff had failed to mitigate his losses by refusing to return to work.
The majority of the Supreme Court of Canada found in favour of the Teamsters finding that in certain circumstances a dismissed employee will have to return to work for the same employer to mitigate his or her damages. Justice Bastarache, writing for the majority, stated at paragraph 18:
In my view, the Courts have correctly determined that in some circumstances it will be necessary for a dismissed employee to mitigate his or her damages by returning to work for the same employer. Assuming there are no barriers to re-employment (potential barriers to be discussed below), requiring an employee to mitigate by taking temporary work with the dismissing employer is consistent with the notion that damages are meant to compensate for lack of notice, and not to penalize the employer for the dismissal itself.
The determination of whether or not an employee will be required to return to work to mitigate must be determined an objective “multi-factored and contextual analysis”. At para. 30 Justice Bastarache wrote that the critical element is that an employee:
…not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation …it is extremely important that the non-tangible elements of the situation — including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment, the tangible elements — be included in the evaluation.
In Evans, the majority of the Court held that a “court will consider the following factors” when determining whether an employee should accept re-employment:
- Was the offer of re-employment made before or after the employee left?
- Has the employee commenced litigation?
- Is the salary offered the same?
- Is a similar position offered in the marketplace?
- Are the personal relationships involved acrimonious?
- What is the history and nature of the employment?
- Is the work demeaning?
- Are the working conditions substantially different?
Justice Bastarache also noted at paragraph 30 that is important that “the non-tangible elements of the situation – including work atmosphere, stigma, and loss of dignity, as well as nature and conditions of employment, the tangible elements – be included in the evaluation.”
In reaching its decision the majority of Supreme Court of Canada held that there is no reason to distinguish between constructive dismissal and wrongful dismissal when evaluating the duty to mitigate. This is because a constructive dismissal and a wrongful dismissal are both the result of the employer terminating the employment contract without cause. Nevertheless, Justice Bastarache noted that the Court’s decision would likely have its greatest impact on constructive dismissal cases where, for legitimate business reasons, changes are made to an employee’s position with the result that the employee is constructively dismissal. In these situations, where the employment relationship is not acrimonious and the dismissed employee will not suffer humiliation or loss of dignity, the employee will be expect to return to work to mitigate his or her losses while looking for new employment.
An employee who refuses to return to work may see his or her wrongful damage award reduced as a result of the failure to mitigate his or her damages. However, in Farwell v. Citair, Inc. (General Coach Canada)3 the Ontario Court of Appeal clarified that an employer is obliged to offer the dismissed employee a clear opportunity to return to work to trigger this form of mitigation duty. Therefore, an employer should formally offer re-employment to any employee who claims that he or she has been constructively dismissed.
An employee was offered the choice between termination and a demotion with a 20% pay cut (to be implemented in 6 months) in Fillmore v Hercules SLR Inc.4 Justice Diamond rejected the employer’s argument that the employee’s decision to choose the dismissal constituted a failure to mitigate his damages.
Since Evans, there have been several appellate level decisions that have considered whether or not dismissed employees were required to accept re-employment and found in favour of the dismissed employee. These decisions do not adhere to the rigid step by step review of the factors above, but instead, consider the specific facts, apply an objective standard, and decide whether it would have been reasonable for the employee to accept re-employment. In all of these decisions, the dismissed employee would likely have been required to accept offers of re-employment had the employer not made negative allegations about the employee at the time of dismissal.
The Alberta Court of Appeal in Magnan v. Brandt Tractor Ltd.5 considered an employee with 38 years of service who had been constructively dismissed. The constructive dismissal was triggered after the defendant advised the plaintiff that he would be forced into retirement on December 31, 2004 pursuant to the company’s retirement policy. The plaintiff made it clear to the defendant that he would not retire. Despite the plaintiff’s protests, in November 2004 the defendant announced that it had hired his replacement. The plaintiff’s lawyers then contacted the defendant and informed it that the company could not force the plaintiff to retire under Alberta law and that the plaintiff did not intend to retire.
The defendant’s lawyer responded to the plaintiff’s lawyer by way of letter writing that the defendant would not require the plaintiff to retire. However, the letter also stated:
Brandt is both shocked and disappointed that Mr. Magnan misrepresented his intentions …, allowed a replacement employee to be hired, and accepted retirement gifts from Brandt under what were obviously false pretences.
The plaintiff refused to return to work and claimed he had been constructively dismissed. The Court of Appeal agreed with the trial judge’s conclusion that because the defendant had expressed extreme annoyance with the plaintiff’s actions it would not be reasonable for the plaintiff to return to work. In reaching its decision, the Court of Appeal distinguished Evans noting that the plaintiff in that case had proposed to return to work for at least part of the notice period. Discussing the significant impact of the lawyer’s letter, the Court wrote at paragraph 31:
Here, the trial judge concluded that in the circumstances of Magnan’s constructive dismissal, it was not reasonable to expect him to accept Brandt’s offer to allow him to return to work. We can ascertain no palpable or overriding error on the part of the trial judge in making this determination. In fact, having regard to Brandt’s unwithdrawn allegation of dishonesty on the part of Magnan, as set out on Brandt’s solicitor’s letter of December 29, 2004 (referred to above), we are of the view that the finding of the trial judge is merited.
In McKee v. Reid’s Heritage Homes Ltd.6 the Ontario Court of Appeal considered Evans in the context of a 64 year independent contractor who had been selling homes for the defendant for 17 years when the defendant repudiated her contract and, in its place, offered the plaintiff a 6 month fixed term contract. The defendant’s letter to the plaintiff offered her a standard form employee contract with a 14-day notice period and “first pick” of one phase of any project in Guelph. In this same letter, the defendant opined that the plaintiff’s sub-agents had performed badly and this might have something to do with “how much [the plaintiff] was taking off the top of every deal”.
The plaintiff took the position that she had been constructively dismissed. The Court of Appeal found that the plaintiff was not required to accept the defendant’s offer. MacPherson J.A., writing for the Court, wrote at paragraphs 63:
Although McKee was willing to consider continuing to work for RHH when this was being discussed in January 2005, the course of negotiations between January and March, with the nasty and hurtful February 11 letter from Blevins to McKee in the middle of that period, caused such a rupture that it would be unfair to conclude that McKee had a duty to accept RHH’s offer of time-limited continuing employment.
More recently, the Ontario Court of Appeal in Turner v Inndirect Enterprises Inc.7 upheld the a the plaintiff was not required to return to work to mitigate her damages because the following circumstances surrounding the plaintiff’s dismissal were offensive to her dignity:
- the plaintiff was informed that she had been dismissed for “financial reasons”, however, other more junior employees kept their jobs despite the fact that the plaintiff did her job very well;
- the plaintiff was initially told that her employment had been terminated. However, a week later the plaintiff was told she was being laid off and her last day of employment at the defendant was extended;
- management did not say anything to the plaintiff on her last day of employment prior to her departure the defendant only asked the plaintiff to return to work after receiving a demand letter from the plaintiff’s lawyer; and
- the president of the defendant had alleged that the plaintiff had been “misleading, dishonest and possibly a liar”. The allegation subsequently turned out to be untrue.
In 2015 the British Columbia Court of Appeal held in Fredrickson v. Newtech Dental Laboratory8 that an employee was not required to accept re-employment after she had been dismissed immediately after returning from a short medical leave of absence. The Court based its decision on the fact that the employer’s offer to the plaintiff to return to work did not provide for her to “made whole” because the employer did not offer to pay the plaintiff from the date of her dismissal to the date she was to resume her employment (a period of approximately one month). The efforts by the plaintiff to recover that amount meant that there would be continued opposition and incompatibility between the employer and employee.
In addition the Court found that the owner’s decision to record at least two conversations with the employee and then make use of those conversations and his conversation with another employee where he agreed that the plaintiff would be “too embarrassed to ever return to work” also eroded the employment relationship making it reasonable for the plaintiff to refuse of the offer of re-employment.
In 2015 in Morgan v. Vitran Express Canada Inc.9 the Ontario Court of Appeal rejected the employer’s arguments that the trial judge had erred in finding that a constructively dismissed employee was not required to continue his employment at the defendant. The trial judge her decision based on the following facts:
(i) The work environment at the defendant was unfriendly;
(ii) The work the plaintiff was offered as a freight analyst was of lesser importance than his job as a dock supervisor;
(iii) By accepting the freight analyst position, the plaintiff would have suffered a loss of dignity in the eyes of the dock workers he used to supervise. The freight analyst position had not been posted, so other employees would have known it was a position created specifically for the plaintiff because of his perceived ineptitude and would have been viewed as a demotion by other employees;
(iv) the plaintiff had been treated in an unacceptable manner by his employer in the period leading up to his constructive dismissal; and,
(v) the plaintiff’s personal relationships with his supervisors were acrimonious in the sense that no matter what the plaintiff did, they continued to criticize him
In Brandt Tractor, McKee, Turner, Fredrickson and Vitran the respective appellate courts held that the employers’ actions immediately before and after dismissal damaged the employment relationships to such an extent that the dismissed employees were not required to accept re-employment to mitigate their damages. These decisions make it clear that an employer who intends to offer a dismissed employee reinstatement must ensure that the environment to which the employee will return is not one in which the employee will have lost trust and faith in the employer. The standard a court will apply is whether a reasonable person would accept the offer of re-employment having regard to all the surrounding circumstances.
- Evans v. Teamsters Local Union No. 31, 2008 SCC 20; ↩
- see also Mifsud v. MacMillan Bathurst Inc. (1989), 70 O.R. (2d) 701 (C.A.); ↩
- Farwell v. Citair, Inc. (General Coach Canada), 2014 ONCA 177 at para. 20; ↩
- Fillmore v Hercules SLR Inc., 2016 ONSC 4686; ↩
- Magnan v. Brandt Tractor Ltd., 2008 ABCA 345; ↩
- McKee v. Reid’s Heritage Homes Ltd., 2009 ONCA 916; ↩
- Turner v Inndirect Enterprises Inc., 2009 O.J. No. 6345 (S.C.J.), affr’d 2011 ONCA 97; ↩
- Fredrickson v. Newtech Dental Laboratory Inc., 2015 BCCA 357; ↩
- Morgan v. Vitran Express Canada Inc., 2015 ONCA 293; ↩