Canada: Breaking-Up Is Complicated! Constructive Dismissal And The Duty To Mitigate

In Gent v Strone Inc., a 2019 Ontario Superior Court of Justice decision, the Court has reaffirmed that a duty to mitigate requires a wrongfully dismissed employee to accept an offer for re-employment where it is reasonable to do so.

Facts

At the time of his layoff, on October 15, 2015, Mr. Gent had worked for Strone Inc. ("Strone") for 23 years and was 50 years of age. He began his career at Strone as a carpenter, and was subsequently promoted to the position of Health & Safety Training Specialist.

Strone informed Mr. Gent that he was being temporarily laid off due to a decline in business, and that he would be recalled once business improved. Strone requested that Mr. Gent inform the Company on an ongoing basis of his availability to work.

On October 27, 2015, Counsel for Mr. Gent advised Strone that his client considered the temporary layoff to be a constructive dismissal. On November 10, 2015, Strone recalled Mr. Gent to "active employment". However, Mr. Gent decided not to return to work, taking the position that it would be "embarrassing and degrading" for him to do so.

Mitigation

The Court agreed with Mr. Gent that, in the circumstances, the temporary layoff did in fact constitute a constructive dismissal. In failing to provide Mr. Gent with compensation and continuous employment, Strone breached a fundamental aspect of the employment agreement. Furthermore, the right to temporarily lay off Mr. Gent was not provided for in the terms of the employment contract. However, the finding by the Court that Mr. Gent had been constructively dismissed was only one aspect of the inquiry. When constructive dismissal occurs, duties befall both parties. The employer has a duty to provide an employee with reasonable notice of termination or pay in lieu of notice. The employee, for his part, has a duty to mitigate damages by making reasonable efforts to find work, including considering re-employment, where this possibility exists.

Reasonableness Test

It should be recalled that Mr. Gent had been offered re-employment with Strone within a month of his constructive dismissal. In deciding whether Mr. Gent had fulfilled his duty to mitigate, the Court asked, "whether a reasonably objective individual in his circumstances would not have concluded that returning to work would be too embarrassing, humiliating, and/or degrading."¹ The Court found no objective basis for such a conclusion and held that Mr. Gent's subjective belief that returning to work would have been humiliating, embarrassing, and/or degrading, did not suffice.

In reaching its decision, the Court relied on decisions from the Ontario and British Courts of Appeal, as reiterated by the Supreme Court of Canada in Evans v. Teamsters, Local 31:

"... Where the employer offers the employee a chance to mitigate damages by returning to work for him or her, the central issue is whether a reasonable person would accept such an opportunity. In 1989, the Ontario Court of Appeal held that a reasonable person should be expected to do so '[w]here the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships involved are not acrimonious (Mifsud v. MacMillan Bathurst Inc. (1989), 70 O.R. (2d) 701 (Ont. C.A.))...'"²

Hence, while a reasonable offer of re-employment should be accepted, an essential feature of the reasonableness analysis is that the duty to mitigate should not drive an employee to accept re-employment in an atmosphere of "hostility, embarrassment or humiliation."³ Mr. Gent's own evidence demonstrated that he had no issues with his superiors, that Strone was a good place to work, and that he had enjoyed his time there. Furthermore, Strone guaranteed in its recall letter to Mr. Gent that there would be no reprisals and that he would be treated normally.

The Court was further persuaded by its finding that Mr. Gent was being recalled to the position he held prior to his layoff, and on substantially the same terms and conditions of employment. It was clear from Mr. Gent's evidence that he had no intention of returning to work at Strone, did not consider or evaluate the re-employment offer, but instead decided to commence legal action. Indeed, one of Mr. Gent's main arguments was that by the time of the recall offer he had already commenced an action against Strone. However, relying on previous decisions, the Court confirmed that the commencement of legal action was only a factor to be considered in the reasonableness analysis.

In light of these facts, the Court held that it would have been reasonable for Mr. Gent to accept the offer of re-employment and, in not doing so, he had failed in his duty to mitigate. As a result, it found that his entitlement was to damages only from the date of his temporary layoff to the date of his letter of recall, a period of just 3.5 weeks, which is significantly less than the reasonable period of notice, and related damages, that would normally have been associated with his years of service and position at Strone.

Conclusion

An offer of re-employment should not be hastily dismissed. It may seem counterintuitive that one should be forced to consider re-employment with the very Company from which one was dismissed. However, the mere fact that one has been wrongfully dismissed does not invariably mean that there has been a breakdown in the employment relationship. An objective rather than subjective evaluation of the offer, the working conditions and employment relationships, is critical, so as not to run afoul of one's common law duty to mitigate, and to avoid costly litigation that may in the end result in only nominal damage awards.

Footnotes

1 Gent v Strone Inc., 2019 ONSC 155 at para 38.

2 Ibid at para 32.

3 Ibid.

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.