Terminated employees are generally entitled to notice or pay in lieu thereof at common law. Failure to provide such notice or pay constitutes a wrongful dismissal, and the employee can sue the employer for the amounts owed. However, a wrongful dismissal does not entitle an employee to take an extended vacation while awaiting the outcome of litigation. Rather, a wrongfully terminated employee must make reasonable efforts to mitigate the resulting damages. This usually takes the form of trying to find suitable alternative employment, and failure to do so will result in a reduction in notice entitlements. However, in some circumstances, an employee will be required to accept work from their former employer in order to mitigate their damages.
Such situations most commonly arise in cases of constructive dismissal. This is because, when an employee is constructively dismissed, the employer does not explicitly terminate the employment relationship. Rather, the employer commits a fundamental breach of the employment agreement by unilaterally altering its terms or by showing through a series of acts that it no longer intends to be bound by the contract. Therefore, an employee can be constructively dismissed even if the employer still wants him or her to continue working.
In Evans v. Teamsters Local Union No. 31, 2008 SCC 20, the Supreme Court of Canada confirmed that in some cases, a dismissed employee will have to return to work for the same employer in order to mitigate his or her damages. Such situations may arise with employees who were constructively dismissed or expressly terminated. However, as mentioned above, they may be more common in cases of constructive dismissal.
The Court held that the test for whether an employee must return to work for the same employer to mitigate his or her damages is whether a reasonable person would accept the opportunity to do so. It adopted the Ontario Court of Appeal’s explanation in Mifsud v. MacMillan Bathurst Inc. (1989), 1989 CanLII 260 (ON CA) of when a reasonable person would be expected to do so. Namely, “[where] 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”.
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,” with the critical element being that an employee will not be obliged to mitigate “by working in an atmosphere of hostility, embarrassment, or humiliation”. Further, the employer bears the onus of demonstrating that the employee should have accepted the opportunity for re-employment.
As constructive dismissals take a variety of forms, different causes of constructive dismissals are more or less likely to result in a situation in which an employee is obligated to accept offers to work for a former employer. Ontario courts have found that constructively dismissed employees were not required to do so in a variety of circumstances, including where the employee was demoted, and the demotion itself was humiliating, and where the employee had been mistreated. However, other situations, such as where a constructive dismissal is the result of a temporary layoff, while all other terms of employment remain substantially the same and the employee was not mistreated, are more likely to result in such an obligation.
Takeaways
It is important to speak to a legal professional if you suspect that you may have been constructively dismissed, not only to know whether your circumstances do constitute a constructive dismissal but to know your mitigation obligations if that is the case. Each constructive dismissal case is different, and different situations call for different responses. A legal professional can provide you with a proper assessment of your specific situation and prevent you from making costly mistakes.