Employment & Labour

Refusing to accept offer from purchaser not failure to mitigate

By Barry B. Fisher

In this case, two long-term plaintiffs were told that the employer was selling the division that they worked for to another company and that the other company would make them a comparable job offer. The plaintiffs rejected the other company’s offers.

The legal issue was whether this was a failure to mitigate, thereby reducing the employer’s severance obligations.

The judge said no for the following reasons:

1) The other company’s offers came before the actual termination from the employer and were not restated after the actual termination.

2) Because the employer demanded that before paying out severance the plaintiffs had to sign a release, it was reasonable not to accept the other company’s offer as this would deny the plaintiffs any ability to later sue the other company for any shortfall.

3) As the other company was not prepared to recognize their years of service with the employer, it was reasonable for the plaintiffs to reject the offer.

4) The plaintiffs had to agree with the other company that they would not disclose their pay rate to other employees as their pay rate was higher. This would make the future work relationship “potentially difficult.’

5) The higher salary was only guaranteed for 18 months, less than the 26 month notice period awarded by the court.

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