The courts are starting to recognize that it is unreasonable for an employee to simply walk away from gainful employment on the pretext of constructive or wrongful dismissal and seek damages for the employer’s failure to provide reasonable notice. Employers must be aware that if an employee suggests that he or she has been constructively dismissed or wrongfully dismissed, it is possible to significantly increase the employee’s risk and simultaneously ease the employer’s burden in proving that the employee failed to mitigate. If at all possible, the employer should:

  • immediately disagree that there has been constructive or wrongful dismissal;
  • subject to financial constraints, offer the employee a similar employment position with a comparable rate of pay;
  • ensure that there is no hostility with the employee and that the matter is conducted professionally and courteously;
  • ensure that any transition into a new position is handled without any embarrassment to the employee; and
  • offer the employee an opportunity to secure alternative employment, such as time off, in order for the employee to attend interviews or job fairs.

It has been held in numerous instances that an employee has an obligation to mitigate his or her damages where the employer is willing to allow the employee to continue working in some capacity during the notice period.

In the recent Supreme Court of Canada decision Evans v. Teamsters Local Union No. 31 (“Evans”), the majority of the court, in reasons delivered by Bastarache J., held that the same principles with respect to mitigation should apply to employees who are constructively dismissed or wrongfully dismissed:

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, 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.  

In Evans, the employee was a long-time business agent with the respondent union. The employee was sent a termination letter and encouraged to “commence discussions” with respect to appropriate severance in lieu of notice. Evans subsequently received a letter from his employer asking him to return to his employment to serve out the balance of his notice period of 24 months. In the lower courts, the trial judge held that Evans was wrongfully dismissed; however, the British Columbia Court of Appeal set aside the trial judge’s award and held that Evans had not acted reasonably with respect to the job offer. By refusing to accept the job, even on a temporary basis, Evans failed to mitigate his damages. The Supreme Court of Canada agreed with the Court of Appeal and upheld the decision.  

In wrongful and constructive dismissal cases, if the employer seeks to rely on any failure by the employee to mitigate his or her damages, the employer bears the onus of demonstrating that alternative work is available and that the employee failed to make reasonable efforts to find new employment. Therefore, when an employer offers an employee a different position with the same salary, similar working conditions and where the personal relationships are not acrimonious, it is very likely that a court will find that a reasonable person would accept the employment position as a temporary measure to mitigate damages.

The court in Loehle v. Purolator Courier Ltd. followed the decision in Evans and held that “the standard is an objective one; that is whether a reasonable person would have accepted the position offered by the employer.”

The British Columbia Court of Appeal had earlier concluded in Cox v. Robertson that additional factors, such as the history of the relationship, whether the employee commenced litigation and the timing of the offer of re-employment were crucial factors that would be taken into the objective assessment of reasonableness.  

Furthermore, the court in Farquhar v. Butler Brothers Supplies Ltd. (1988) noted that an employee will “not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation.”

In the recent case of Davies v. Fraser Collection Services Limited, Madam Justice Humphries held that:  

On the evidence before me, I am satisfied that there were no conditions arising out of factors such as humiliation, embarrassment, or hostility in the work-place that would render the return to work unreasonable, despite Mr. Davies’ statement to the contrary.

The circumstances of the termination of an employee’s contract are generally less personal when an employee has been constructively dismissed in comparison with employees who have been wrongfully dismissed. In constructive dismissal cases, it is usually not directly about the individual.

As held by the Court in Loehle:

Mr. Loehle was a valued employee of Purolator. His job performance had never been in question. The company wanted him to stay and, but for the negligence of management, Mr. Loehle would have continued as an employee in a higher position. The offer of employment to a demoted position was an obvious attempt to retain Mr. Loehle as an employee and, at the same time, relieve the company from liability for its negligence. As well, the salary would have remained at the higher level.  

In conclusion, if there is no bad faith in the termination, the court will consider any other reasons and the context of the termination. The current caselaw establishes that as long as there are no barriers to re-employment, then 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.