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Mitigating Wrongful Dismissal Damages After Evans v. Teamsters

In a decision released last week, an Ontario Court ruled that an employee had not failed to mitigate his losses flowing from his termination by refusing to accept a more physically demanding job at less pay.

The case is called Bannon v. Schaeffler Canada.

The case is interesting because it deals with the situation of an employment_contractemployer that gives an employee a choice of accepting a new job or being terminated.  The employer was laying off workers, but offered Bannon the opportunity to bump into a lower paying job that involved more physical exertion.  It appears this is a nonunion employer that includes a form of seniority bumping rights found commonly in unionized workplaces.

Bannon believed he was not physically fit enough to perform the new job, so he declined the offer for the new job and was terminated as a result.  The employer argued that Bannon had failed to mitigate his damages arising from the termination when he did not accept the alternate job.

Decision

The Court rules that this case falls within the realm of the Evans v. Teamsters decision, in which the Supreme Court ruled that an employee may need to accept an alternate job offered by the employer as part of the duty to mitigate if a “reasonable person would accept that opportunity”.

In this case, the Court rules that Bannon’s refusal to accept the new job was not unreasonable.  Bannon was not physically fit, and it was reasonable to believe that he would have difficulty with the new job.  Therefore, there was no requirement to accept the new job offer.

The Court ordered 20 month’s notice, based on the employee’s 36 years of service, his age (58), and “the difficult employment environment to which he was exposed upon his dismissal”.

Discussion of the Duty to Mitigate with the Same Employer

The practical implications of the SCC’s decision to require employees to mitigate in a wrongful dismissal case by accepting a job they don’t want with the employer who has just fired them interests me.

I’ve noted before how this  puts the employee in an odd legal position, one that would make no sense to anyone but a judge or expert employment lawyer (and not even to many of them). See my earlier post: Is Employment Law Losing Touch With Common Sense?

Imagine an employee who is entitled to 12 month’s reasonable notice arising from their dismissal, but is required to accept a worse job, that they don’t want, offered by the employer in order not to forfeit those damages.  On the Evans approach, the employee must accept the job they don’t want, but only for the length of the reasonable notice period.  Of course, they probably don’t know what the reasonable notice period is, since  judges decide that period after litigation. 

Now follow along.  At the end of the reasonable notice period (whatever that is), the employee can just leave, since all she was doing was mitigating the employer’s earlier breach of the contract.  The original contract is just coming to an end. The employee is not quiting when she stops working; her period of forced mitigation in a job she doesn’t want has just ended, so she can now leave.  But it sure will look like she has just quit to all but those who specialize in employment law, and even to some who do.  One day she is working in job X (the mitigation job she doesn’t want), and the next day she doesn’t come to work.  Will look like a quit to the employer, even though legally it is not.

When the employee stops working the ‘mitigation job’ at the end of the reasonable notice period, because she doesn’t like it and never wanted it, is she then disentitled from employment insurance for having voluntarily left a job?  Workers who quit a job usually forfeit EI.  Should an employee be disqualified from EI because they leave a job that they only took in order to mitigate damages caused by the employer’s breach of the employment contract?

What do you think the EI officers would decide when confronted by an employee who appeared to have a job, but then voluntarily left it. If the employer marks ‘quit’ on the government termination forms, are they commiting an offense?

What if the employee guesses the period of reasonable notice wrong? Remember, the employee won’t know what the period of reasonable notice is while she is mitigating in the job she doesn’t want.  So what if a court later rules that reasonable notice should have been 12 months, but the employee thought it was only 6 months and left the job after that period of time?  Does the employee thereby forfeit the damages that would have been owed for the remaining 6 months?

To me, this seems like a case of the law losing touch with common sense.  If a legal rule makes no sense to your average employee, then is it time to change the rule?

Or have I lost touch with common sense?

 

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4 Responses to Mitigating Wrongful Dismissal Damages After Evans v. Teamsters

  1. Jody Reply

    March 18, 2013 at 10:48 pm

    Certainly it would make sense to set up some sort of arbitration process that employees could access while working the mitigation job, to help them decide what the next step should be. This also seems to be a bit of a loophole for employers who wish to avoid damages by offering employees a mitigation job that they know (or should know) is highly unattractive (or even punitive) to the employee.

  2. Dan McGarry Reply

    March 22, 2013 at 9:46 pm

    Workers who are initially denied E.I for reasons such as ‘quitting’ or being dismissed for cause are allowed to appeal the decision and to present their reasons for quitting.

    In our experience, if the employee has a plausible reason, the original ruling is usually overturned.

    • admin Reply

      March 22, 2013 at 10:16 pm

      Dan, ok, but that can take how many years? And my confidence in Boards of Referees is very low. I doubt many of them would grasp the notion that a worker who voluntarily leaves a job is nevertheless entitled to EI because all they were doing is mitigating their loss.

  3. Dan McGarry Reply

    April 2, 2013 at 10:16 pm

    Dave,
    Agree with your sentiment and in this instance the worker as you surmise would probably be denied access to EI.

    During my career however, I have been party to numerous cases in which workers who quit their jobs for various reasons, after an appeal were allowed to collect their EI benefits. And the process is surprisingly quick for a government agency.

    One of the keys to the decision is whether the employer appears before the Board to present evidence.

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