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Court of Appeal confirms it can be reasonable to refuse new employment if new position is not comparable to position lost

offer of new employment

Is it reasonable for an employee, slated to lose his or her employment as a result of the sale of part of his or her company, to refuse an offer of new employment with the purchaser of the business?

In Dussault v. Imperial Oil Limited, 2019 ONCA 448, the Court of Appeal for Ontario confirmed that it is reasonable if the new position fails to be comparable in status, hours and remuneration.

Facts

In my earlier post, Twenty-Six Months’ Notice Awarded to Employees Who Rejected Offer of Continued Employment, I wrote the following:

Is an employee who is slated to lose his or her employment as a result of the sale of part of his or her company required to accept an offer of employment from the purchaser, if that offer of employment is on substantially less favourable terms?

In that very lengthy post I detail how two, long-service employees of Imperial Oil, Mr. Dussault and Ms. Pugliese had been terminated by Imperial and then sued for wrongful dismissal. A material point in that case was whether the plaintiffs had failed to mitigate their damages by accepting an offer of new employment from Mac’s, who was purchasing a part of Imperial’s business. For more details on all of the arrangements, see my earlier post.

Decision of the Ontario Superior Court

In a lengthy decision, the Honourable Justice Lise G. Favreau of the Ontario Superior Court of Justice held that it was not reasonable for them to be required to mitigate their damages by accepting the Mac’s offer. Her reasons for decision are also captured in my earlier post.

Decision of the Court of Appeal for Ontario

In a short, written decision, the Court of Appeal for Ontario (Brown, Roberts and Zarnett JJ.A.) upheld Justice Favreau’s decision on this point, writing the following:

[5] We start with the following well-established principles: to mitigate any damages arising from dismissal, an employee must make reasonable efforts to seek comparable employment; and it remains the employer’s burden to prove the employee’s failure to do so. “Comparable employment” does not mean “any employment” but comprehends employment comparable to the dismissed employee’s employment with his or her former employer in status, hours and remuneration.

[6] We see no error in the motion judge’s detailed conclusions that the employment offered by Mac’s was not comparable and that the respondents acted reasonably in refusing it. On the face of Mac’s offers, the proposed employment would have resulted in an immediate, substantial decrease in benefits and, after 18 months, a material drop in base salary.

[7] The appellant’s argument that its proposed lump sum payments to the respondents would have made up any difference in benefits rings hollow given its refusal to disclose those amounts without the respondents first having accepted Mac’s offers and signed a release in favour of the appellant. Moreover, Mac’s offers required the respondents to waive their years of service and their entitlements to common law notice and to termination and severance pay under the Employment Standards Act, 2000, S.O. 2000, C. 41, based on those years of service.

[8] The determination of whether the respondents had mitigated their damages by accepting comparable employment is a fact-driven inquiry. The motion judge’s findings stand firmly rooted in the evidence and are entitled to deference on appeal. We agree with her conclusion that the appellant did not discharge its burden to prove the respondents had failed to mitigate their damages.

Commentary

I start by noting that either the award of 26 months was not challenged by the appellants or received no consideration by the Court of Appeal. Given the court’s decision in Dawe v. The Equitable Life Insurance Company of Canada, 2019 ONCA 512, about which I blogged in my post ONCA says being being 62 y/o, 37 years employed, and a senior VP is NOT “exceptional circumstances”, one might have thought that such an award would garner comment, but it did not.

Second, it also seems curious that the Court of Appeal made no mention of its own decision in Brake v PJ-M2R Restaurant Inc., 2016 ONSC 1795, about which I wrote in my post Court of Appeal Rules that Modest Earnings Earned during Notice Period Not to be Deducted from Wrongful Dismissal Damages.

What this case, and Brake before it, demonstrate to me, is that it is going to be exceedingly difficult for employers to prove, and remember it is to employers to prove, that an employee has failed to mitigate his damages.

Sean Bawden

LL.B., Director,Legal (Employment and Litigation) at Labour Pain
Sean Bawden, is now a director of legal for a private company and blogging about work by an in-house lawyer which he calls “Labour Pain.”To read more click here.
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