Ever since the Supreme Court's ruling in the now-famous (at
least in employment circles) Evans v. Teamsters case, employers have had a new
"weapon" at their disposal in wrongful dismissal cases:
mitigation. Mitigation of damages, in the context of a
wrongful dismissal, is the reduction of one's damages through
alternate employment. Briefly, a dismissed employee has a
duty to mitigate his or her damages by searching for alternate
employment; any mitigation that is achieved is subtracted from any
damage award for reasonable notice. Further, if the Court
finds that appropriate mitigation efforts were not made, or
ignored, the Court can also reduce the damage award.
While the obligation to mitigate has long existed in wrongful
dismissal cases, Evans broke new ground when the Supreme
Court pronounced that the obligation to mitigate goes so far as to
require a dismissed employee to even accept alternate employment
with the same
employer. This was seen in some circles as a
major breakthrough for employers, and in one sense it certainly is:
when dealing with changing terms and conditions of employment,
claims of constructive dismissal can often be diminished – if
not negated – with the proper execution of the offer of
alternative employment, given this extension of the duty to
However, as one Newfoundland employer recently found out, simply
relying on the mitigation obligation in a wrongful dismissal case
is not necessarily going to win the day. This is especially
true when the offer made to the employee is insincere and when the
employer's conduct leaves something to be desired. In
such cases – where the employment relationship has been
damaged – Evans says that an employee would not
necessarily be required to accept alternate employment (or
re-employment as the case may be).
In Fredrickson v. Newtech Dental Laboratory Inc. the
employer, Newtech, terminated the employment of Ms. Fredrickson in
July, 2011 when it purported to lay her off. In the fall, Ms.
Fredrickson filed a wrongful dismissal lawsuit against
Newtech. Subsequent to Ms. Fredrickson filing her lawsuit,
Newtech made several offers to re-employ her.
At trial, Newtech was successful in convincing the judge that
Ms. Fredrickson had failed in her duty to mitigate by not accepting
the offer(s) of re-employment, relying on the reasoning in
However, the Court of Appeal delved deeper into the analysis of
two specific aspects: the substance of the offer(s) of
re-employment and the state of the employment relationship.
Citing the idea that the "contract of employment is typically
of longer term and more personal in nature than most contracts, and
involves greater mutual dependence and trust", the Court found
that Newtech's various offers of re-employment were not
"make-whole" offers, and also that Ms. Fredrickson's
supervisor discussed the fact that she would not likely return in
the circumstances. Accordingly, the Court of Appeal found
that "any chance of repairing the employment relationship was
irretrievably lost" and that Ms. Fredrickson could not have
been expected to mitigate her damages by accepting any of
This stands as a lesson to employers that to rely on the
wrongfully-dismissed employee's obligation to mitigate is not a
foolproof strategy. As mentioned, when seeking to implement
changes to conditions of employment the Evans decision
certainly provides some assistance in protecting employers from
claims of constructive dismissal. However, if an employer
simply makes an offer of re-employment knowing the employee could
never accept and therefore thinks itself absolved under the
doctrine of mitigation, that employer must be prepared to live with
the consequences of having its bluff called.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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