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Constructive Dismissal and Duty to Mitigate
Employment Law

Constructive Dismissal and Duty to Mitigate

By June 20, 2019March 9th, 2022No Comments

In Brake v. PJ-M2R Restaurant Inc., the Court of Appeal for Ontario considered two frequent issues in wrongful dismissal actions: constructive dismissal and the duty of an employee to mitigate employment losses by finding alternative employment. The Court found that the trial judge was correct in finding that the employee had been constructively dismissed. Of greater note, the Court confirmed the trial judge’s decision that the employee’s income during the reasonable notice period would not be deducted from the award for damages. The employee was awarded a twenty-month reasonable notice period after working for the employer for twenty years.

The employee was a 62-year-old long-serving manager of a McDonald’s restaurant that received excellent performance reviews from 2000 to 2010. In 2011, the employee received her first negative performance review. The employer responded to this negative review by assigning the employee to an “arbitrary and unfair” discipline program. The program included relocating the employee to a McDonald’s inside a Wal-Mart store that was notorious for under-performance and high employee turnover rates. After the employee was inevitably unable to meet the goals of the discipline program, she was offered a choice between a demotion from Manager to First Assistant or termination. The Court agreed with the trial judge that the action taken by the employer amounted to a substantial change to the essential terms of the employment contract. The employee was found to have been constructively dismissed.

The Court then looked at the employee’s duty to mitigate employment losses during the reasonable notice period. The Appellant argued that the employee’s refusal to accept a demotion represented a failure to mitigate employment losses. The Court resoundingly rejected this argument as the demotion was found to be embarrassing, hostile, and humiliating to the employee. Generally, income earned during the reasonable notice period would have been deducted from any damages awarded to an employee. In Brake, the Court deviated from this general principle.

The employee earned income from several sources during the reasonable notice period. None were considered to be equivalent or comparable positions to her manager position at McDonald’s. The Court determined that “where a wrongfully dismissed employee is effectively forced to accept a much inferior position because no comparable position is available, the amount she earns in that position is not mitigation of damages and need not be deducted from the amount the employer must pay.”

The Court in Brake has taken a somewhat new approach here to the question of mitigation. By considering not just whether or not the employee had found alternative employment, but also the nature of that employment, the Court has potentially altered the standard for the duty to mitigate.


If you or anyone around you has been wrongfully dismissed from their workplace, get in touch with our employment lawyers today before crucial time flies out!!

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