Facts
Decision
Comment


On 31 October 2022, the Ontario Superior Court released Quesnelle v Camus Hydronics Ltd,(1) a decision that addresses an employee's duty to mitigate in a constructive dismissal.

Facts

The plaintiff, a heating, ventilation and air conditioning (HVAC) employee with seven years of service, was advised on 30 March 2021 that his company-paid vehicle would be taken away at the end of April 2021. On 29 April 2021, the plaintiff (through his lawyer), advised the employer that:

  • the removal of the company vehicle amounted to a reduction of more than 30% of his compensation;
  • this was a constructive dismissal; and
  • he was resigning from his employment, effective 14 May 2021.

On 11 May 2021, the plaintiff listed his home in Oshawa for sale and it sold on 16 May 2021. The plaintiff then moved to his partner's home in Omemee (which was a further 40-minute commute from his former employer). On 18 June 2021, the employer offered to re-employ the plaintiff to perform the same duties on the same terms and conditions of employment, including use of the company vehicle for a period of one year, until 14 May 2022. The employer also offered to pay the plaintiff for the salary lost from the date of his resignation until his return to work, and to contribute C$2,500 for his legal expenses.

Decision

The Court held that the employer's unilateral removal of the vehicle package, which represented approximately 21% of the plaintiff's total compensation, constituted constructive dismissal. As a result, the plaintiff was entitled to reasonable notice of termination.

While the constructive dismissal conclusion was not surprising, this case is worth noting due to the Court's commentary on the plaintiff's duty to mitigate. It is well established in a wrongful dismissal that employees are obliged by law to mitigate the damages that flow from the wrongful dismissal by seeking an alternative source of income in the absence of a pre-determined fixed-notice period or other agreement to the contrary.(2) However, the onus is on the employer to prove that the employee would likely have found a comparable position reasonably adapted to their abilities and that the employee failed to take reasonable steps to find that comparable position. In this case, the employer argued that the plaintiff had failed to mitigate his damages in two respects – namely, by:

  • refusing to accept the employer's return to work offer; and
  • moving his home from Oshawa to Omemee, where there were fewer jobs in the HVAC field.

On the first mitigation issue, the Court held that, had the plaintiff "not yet moved to Omemee, he would have been obliged to accept [the employer's] offer of re-employment in mitigation. But [the employer's] offer simply came too late in the game".(3) The Court added that at a reasonable individual in the plaintiff's circumstances would not have concluded that "returning to work would be too embarrassing, humiliating, and/or degrading".(4) However, the plaintiff had already moved prior to the offer of re-employment, and as such, the Court held that a "reasonable person could decline" the additional 40 minutes per commute.(5)

On the second mitigation issue, the Court reduced the 10-month notice period to seven months because of the plaintiff's decision to move away from the job market. The Court held that, "if he intended to look for work in the HVAC field, a reasonable person would not move away from the GTA".(6)(7)

Comment

Constructive dismissal claims can arise when an employer makes a unilateral and fundamental change to a term or condition of an employment contract, such as a reduction in remuneration or an alteration to job duties. However, as the Court re-iterates in the Quesnelle decision, employers can reduce their exposure to constructive dismissal damages by:

  • providing the employee with reasonable notice of the change to the term or condition of their employment; and
  • in appropriate circumstances, offering the employee a clear opportunity to work out the notice period after the employee has informed the employer that they are treating the change in their contract as a constructive/wrongful dismissal.

While the latter may not be possible in all constructive dismissal situations, it is certainly worth considering in circumstances where the employee's return to work would not be considered embarrassing, humiliating and/or degrading.

For further information on this topic please contact Brad Hallowell at KPMG Law by telephone (+1 416 549 7794) or email ([email protected]). The KPMG Law website can be accessed at www.kpmg.com.

Endnotes

(1) 2022 ONSC 6156.

(2) Bowes v Goss Power Products Ltd, 2012 ONCA 425, at para. 24

(3) Quesnelle at para. 87

(4) Ibid at para. 89

(5) Ibid at para. 92

(6) Ibid at para. 97

(7) "GTA" refers to the Greater Toronto Area