Canada: Substantial Wrongful Dismissal Claim Deflated By Employee's Failure To Mitigate

Employees have a legal duty to mitigate wrongful dismissal damages by accepting an offer of re-employment with the same employer in certain circumstances. A reasonable person is 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."1

The duty to mitigate is difficult but fertile terrain for employers to navigate in defending wrongful dismissal claims. Employers bear the burden of proving an employee's failure to mitigate, and stand to significantly reduce their liability if they can beat the odds and do so successfully. What does it take to win on mitigation? The Ontario Superior Court of Justice's recent decision in Gent v. Strone provides some helpful guidance.

In Gent v. Strone Inc.,2 the Superior Court held that a wrongfully dismissed employee failed to mitigate his damages by refusing a recall to employment from a temporary layoff. As a result, his reasonable notice damages were reduced from eighteen months to three-and-a-half weeks, the length of time between the commencement of his layoff and his employer's offer of re-employment.

The plaintiff in Gent v. Strone was a 53-year-old Health & Safety Training Specialist with over 23 years' service at the time of his constructive dismissal. Amidst a downturn in business, Strone Inc., the plaintiff's employer, began implementing temporary and permanent layoffs. On October 15, 2015, Strone's Vice-President of Operations and Planning met with Mr. Gent and told him that because of the decrease in business, he would be temporarily laid off and recalled back to work as soon as possible when business improved. Mr. Gent's layoff letter stated that Strone would pay 100% of his group benefits during the temporary layoff period, including the premiums that the plaintiff paid himself. It also asked the plaintiff to keep Strone abreast of his ongoing availability and contact information so that it could recall him as soon as possible. Strone asked the plaintiff to return all of the company's tools and equipment, including the company car, for the duration of the layoff.

The plaintiff emailed Strone twice during the first week of his layoff advising of his availability "every day as always" and "every day this week." However, by the following week, the plaintiff, through his counsel, advised Strone that he considered his temporary layoff to be a constructive dismissal. When counsel for Strone replied that there was a possibility he would be recalled to work in the near future, the plaintiff's counsel immediately replied that Mr. Gent felt that the relationship had broken down and that he would not return to work but would start an action against Strone for constructive dismissal. On November 10, 2015, Strone did in fact offer to recall Mr. Gent to "active employment," but the plaintiff refused.

On a summary judgment motion, the Superior Court of Justice found that Strone constructively dismissed Mr. Gent by selecting him for temporary layoff, since he was not employed pursuant to any term or condition of employment entitling Strone to do so. As such, temporary layoff breached the plaintiff's employment contract and Strone's duty to provide him with work and compensation. Justice Pollak rejected Strone's argument that the plaintiff's advice on his availability for recall and his knowledge and understanding of Strone's business difficulties could be construed as evidence of his agreement to change such a significant term of employment. The focus of the proceeding accordingly shifted to the reasonableness of the plaintiff's decision to decline re-employment with Strone as a means to mitigate his damages.

With respect to mitigation, the plaintiff's evidence was that he believed it would have been embarrassing and degrading for him to return to work for Strone. He alleged that Strone's offer was "legal strategy" and "a sham made only in response to his litigation and not a bona fide attempt to return him to work." Further, the plaintiff alleged that Strone's recall offer letter was vague about what his duties would be and whether he would be made whole with back pay for the duration of his temporary layoff.

The motion judge rejected the plaintiff's arguments on mitigation, finding instead that accepting Strone's recall offer would have been objectively reasonable in the circumstances. The Court observed that the plaintiff gave no evidence as to why he held the belief that re-employment would be degrading or humiliating, and merely insisted that "it just would be." On the other hand, during his cross-examination, the plaintiff stated that he had no issues with his superior, that Strone was a good workplace, and that he enjoyed working there.

The Court also considered that even if an employer's offer to re-employ is motivated by a desire to avoid the payment of damages in lieu of severance, that does not make it reasonable for an employee to decline the offer. Moreover, the plaintiff's commencement of litigation by the time the recall offer was made was "not determinative" and "[did] not preclude a finding...that using the objective standard required, Mr. Gent should have accepted or at least considered Strone's offer of employment to fulfil his obligation at common law to mitigate his damages incurred by reason of Strone's wrongful dismissal."

The fatal flaw for the plaintiff's case on mitigation was his admission that he never had any intention of accepting work under any circumstances. Instead of giving real consideration to the offer to return to work at Strone, the plaintiff precipitously commenced an action against Strone for damages.

An employer's offer of re-employment is an important prerequisite to a dismissed employee's duty to mitigate by returning to employment during the notice period. The following elements of Strone's recall letter in Gent v. Strone were found to have clearly addressed the issues which may have been of concern to the plaintiff, making his refusal of the offer unreasonable. Strone assured the plaintiff that:

  • He could contact Strone to discuss an alternative return to work date if he was unable to return on the date proposed.
  • Strone maintained no hard feelings or ill will towards him and still considered him a valued employee.
  • He would suffer no reprisals.
  • Strone agreed that his return to work was not an admission that layoffs are permissible under his contract or that he agreed with Strone's position regarding any pending litigation.
  • He was free to contact Strone to discuss any other questions that he had.

While the letter did not spell out what the plaintiff's specific duties would be on re-employment or whether he would be paid for the duration of his temporary layoff, Strone's letter showed an obvious intention to re-constitute the employment relationship and opened the door to further communication about these matters. In the circumstances, it was incumbent on the plaintiff to re-evaluate his position that he would not return to work "under any circumstances" in order to comply with his duty to mitigate. His stubbornness in this regard ultimately proved costly.

Footnote

1Mifsud v. MacMillan Bathurst Inc. (1989), 70 O.R. (2d) 701 (Ont. C.A.)).

2Gent v. Strone Inc., 2019 ONSC 155

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