The Court of Appeal for British Columbia recently issued a decision narrowing the possibility for employers to use re-employment offers to support an argument that an estranged employee has failed to mitigate damages by refusing to come back to work.

In the decision of Fredrickson v. Newtech Dental Laboratory Inc., 2015 BCCA 357 (PDF), an unanimous panel of the BC Court of Appeal found in favour of an employee who had refused a return to work with her employer. In doing so, the Court of Appeal overruled a trial judgment which had been favourable to the employer.

The Court of Appeal referred to this case as one of "initial misunderstanding and miscommunication". While a review of the facts reveals that may be the case, the facts also may present a scenario familiar to many employers.

The plaintiff had been employed as a dental technician for eight and one-half years in a small collegial office. A total of four people, including the owner of the Defendant company, worked closely together. The Court decision refers to the plaintiff as having been under significant stress related to an illness of a spouse and an injury to her child. In April, the plaintiff advised that she may not come back to work the next day and, on the next day, provided a medical note supporting a medical leave of absence. She remained on leave until July when she submitted a note from her doctor saying that she would be fit to return to work. When she returned to work in July, her boss told her that there was insufficient work and that she would be laid off. This was clearly a negative reaction to her lengthy unscheduled leave.

The plaintiff engaged counsel in early September. The employer's response was "please return to work", a strategy designed to limit wrongful dismissal damages. After the commencement of legal proceedings, the Employer repeatedly offered a return to work, including back pay dating back to its original offer of re-employment in September 2011. The plaintiff's position at trial was that refusing to accept all offers of re-employment was reasonable in the circumstances since it was the company's behaviour which had broken the employment relationship. Further, she argued it was unreasonable for her to return to work in a small office. The plaintiff also led evidence that she had applied for over one hundred positions without success.

At trial, the Court accepted the employer's position that there were no barriers to the acceptance of the offers of re-employment and that coming back to work would have been the reasonable thing to do. Accordingly, the Court only awarded damages from the period of the initial "layoff" to the first offer of re-employment in September 2011, a couple of month's pay. On appeal, the Court of Appeal was asked to deal with the following proposition:

Normally allegations of failure to mitigate revolve around complaints that the dismissed employee did not make adequate efforts to find alternative employment that was there to be found. However, the theory that a plaintiff cannot recover damages that could have been mitigated applies as well to offers to return to employment, provided the offer of return to employment is to a reasonable working situation. (para 18)

The Court was asked to decide and in effect narrow the law as set out by the Supreme Court of Canada in Evans v. Teamsters Local Union No. 31, 2008 SCC 20, where an offer of re-employment was found to lessen an employer's obligations to a wrongfully dismissed employee.

In dealing with the case on the facts before it, the Court found that the trial judge had erred in failing to accord significance to the fact that the offer to pay did not cover the entire period of unemployment and as such was an incomplete offer that was not a reasonable one. Further, the appeal court judges found that the trial judge had failed to reflect the "intangible element of mutual trust, commensurate with the nature of the employment, that flows like a current in the employment relationship." (para 23)

The Court of Appeal found that in the context of a small workplace, the trial judge had failed to "reflect the mutuality of trust". It accepted the plaintiff's arguments that she had lost trust in her employer due to his efforts to originally "lay her off", which she viewed as a pretext to get rid of her. That trust was gone and it was no longer reasonable for her to accept employment. In part, this argument was supported by evidence that the employer's principal had discussed the plaintiff's employment situation with another employee in the small workplace.

Lessons for Employers

The lesson for other employers here is not to shy away from making offers of re-employment, but to make complete offers. Offers should be considered early in circumstances where the employer may have erred or been too hasty in firing. Further, the importance of discretion and confidentiality by managers and human resource personnel in the context of terminations of employment cannot be overstated. After a successful trial on the matter, the employer was exposed to significant damages in addition to the ongoing expenses of litigation.