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Employment & Labour

Employees have a duty to mitigate in constructive dismissals

People collecting a severance after being let go from a company have to be sure they are fulfilling their duty to mitigate damages, even if they believe their job loss was a constructive dismissal, Toronto employment lawyer Jordan Rodney tells AdvocateDaily.com.

“The duty to mitigate in a constructive dismissal case needs to involve a reasonable and genuine effort on the part of the employee — even though it may not be an ideal scenario in the circumstances,” says Rodney, founder of Rodney Employment Law.

He says a constructive dismissal can occur when an employer violates a fundamental term of the employment relationship or unilaterally changed the terms of the job, forcing the employee to quit. Since a resignation in such a case is not truly voluntary, it is, in effect, a termination, Rodney says.

He cites a recent Ontario Superior Court of Justice case involving a 53-year-old man who was temporarily laid off after 23 years of service because his employer said it was not busy. Less than a month later, after the firm secured a contract that required his skills, he was recalled to work, on the same terms and conditions of employment that he enjoyed before, Rodney says.

According to court documents the man refused, stating that he believed it would be acutely embarrassing for him to return to work. During cross-examination, he was asked what evidence he had for that belief, and he replied, “It just would be.”

“There was nothing in the evidence given that supported the view that his return to work after just a few weeks would have been personally upsetting,” Rodney says, noting that the judge stated that the “the applicable test for this court to consider is ‘whether a reasonably objective individual in his circumstances would not have concluded that returning to work would be too embarrassing, humiliating, and/or degrading.’”

The judgment references a 2008 Supreme Court of Canada case where the duty to accept a re-employment offer was summarized as follows: “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 '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.'"

Since the employer had breached the employment agreement, the court ruled that the temporary layoff was indeed a constructive dismissal, though the man’s refusal to come back to work was a failure to mitigate damages, the judgment reads.

“In this case, that employee was too quick to say he was not going back to work under any circumstances, no matter what he was being offered by the company,” Rodney says. “He, therefore did not meet his legal duty to mitigate, and as a result, the employer was saved from paying upwards of 17 months' severance, representing a substantial amount of money.”

Proving a wrongful dismissal claim is much more straightforward than a constructive dismissal, he says.

“The evidence for wrongful dismissal is usually black and white while a constructive dismissal is typically much more grey, and depends on the individual facts of the case, which is why it is tricky for employers to navigate through these situations,” Rodney says.

Employees also struggle with these matters, he says, as “first, they have to establish they were constructively dismissed. Before that is even determined, the duty to mitigate damages is arguably a bit higher.”

As workplaces become more complex and employers try to operate in more cost-effective and creative ways, Rodney says he expects to see an increase in constructive dismissal claims.

He says that the criteria to determine a constructive dismissal are also increasing, and now include someone being forced to move to another city to keep their job, as well as an increase — or reduction — in duties.

Rodney says he advises employers to have an ongoing dialogue with employees, and give them plenty of notice about impending changes.

“Be open-minded and don’t let changes in the company workforce be a unilateral decision because that opens the door to constructive dismissal claims,” he says. “Keep the dialogue going, and, to the best of your ability, offer employees options and give them the opportunity to provide alternate suggestions.”

Rodney says when employees are let go from a company and later offered their old job back, the best course of action is to accept the offer.

“The work environment has to be pretty toxic for you to not return to work,” he says. “Make an effort, try to mitigate at least in part, and don’t just throw in the towel, as what happened in this case.”

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