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When does a constructively dismissed employee have to remain in their employment?

Since the Supreme Court of Canada’s decision in Evans v. Teamsters Local Union No. 31, [2008] 1 S.C.R. 661, there has been a great debate surrounding whether a constructively dismissed employee must remain in their employment with the dismissing employer in order to mitigate their damages. In that case, the Court found that in some circumstances, the duty to mitigate will require an employee to remain in their employment. However, an employee is not required to remain with the employer if he or she would be required to work in an atmosphere of hostility, embarrassment or humiliation.

The Court stated:

I do not mean to suggest with the above analysis that an employee should always be required to return to work for the dismissing employer and my qualification that this should only occur where there are no barriers to re-employment is significant. This Court has held that the employer bears the onus of demonstrating both that an employee has failed to make reasonable efforts to find work and that work could have been found (Red Deer College v. Michaels, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324). 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 CanLII 260 (ON CA), (1989), 70 O.R. (2d) 701, at p. 710). In Cox, the British Columbia Court of Appeal held that other relevant factors include the history and nature of the employment, whether or not the employee has commenced litigation, and whether the offer of re-employment was made while the employee was still working for the employer or only after he or she had already left (paras. 12-18). In my view, the foregoing elements all underline the importance of a multi-factored and contextual analysis. The critical element is that an employee “not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation” (Farquhar, at p. 94), and it is that factor which must be at the forefront of the inquiry into what is reasonable. Thus, although an objective standard must be used to evaluate whether a reasonable person in the employee’s position would have accepted the employer’s offer (Reibl v. Hughes, 1980 CanLII 23 (SCC), [1980] 2 S.C.R. 880), it is extremely important that the non-tangible elements of the situation — including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment, the tangible elements — be included in the evaluation. [emphasis added] (para 30)

Employer’s counsel frequently takes the position that an employee’s refusal to remain in their employment disentitles them to damages, whereas employee’s counsel asserts that they were not required to work under the unilaterally changed terms because it would be humiliating or degrading.

The Ontario Court of Appeal recently provided some guidance on this issue in Chandran v National Bank of Canada, 2012 ONCA 205. In that case, a senior manager of a bank was relieved of his supervisory duties following a number of employee complaints about his condescending remarks and bullying behaviour. His salary remained unchanged. The employee rejected the change in terms and left the bank. He found alternate employment 14 months later. As is typical, the bank took the position that he had failed to mitigate his damages.

The trial judge found that the employee had been constructively dismissed and was not required to mitigate his damages by remaining in his employment. The bank appealed the finding on mitigation. The Court of Appeal upheld the trial judge’s finding that the bank’s imposition of serious discipline on the employee meant that the employee would have been subject to an atmosphere of embarrassment or humiliation if he had remained in his employment. The Court held that it could not possibly be said that the trial judge committed a palpable and overriding error (the standard of appellate review) on this issue. Therefore, the appeal was dismissed.

This decision shows that it can be difficult to win a constructive dismissal case on the basis of a failure to mitigate by refusing to remain with the dismissing employer. Lower courts have expressed some discomfort with the proposition that a dismissed employee must remain in their employment on altered terms. They appear willing to broadly construe the circumstances which could constitute an atmosphere of hostility, embarrassment or humiliation in order to relieve employees of this obligation. While it is certainly not impossible to prove a failure to mitigate on the basis of refusing to remain in one’s employment, it can be more difficult than it would appear simply on the face of the decision in Evans v Teamsters.

Alison Bird
Cox & Palmer

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Alison J. Bird

Employment Lawyer at Cox & Palmer
Alison Bird is a lawyer practicing in Halifax with the Atlantic regional law firm, Cox & Palmer. Alison is growing her practice in the areas of labour & employment law and litigation. Alison is a frequent presenter on employment law topics and recently presented on the challenges being faced by employers dealing with changing demographics in the workplace. Read more
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