One of the basic precepts of employment law is that an employee who has been
terminated, or elects to treat their employment as having been terminated, has a
duty to attempt to mitigate their damages. In other words, a dismissed employee
must use reasonable efforts to avoid economic loss by seeking out comparable
employment. In many circumstances, this can in turn give rise to the question of
whether an offer from the existing employer, perhaps involving changes in terms
and conditions of employment, must be accepted as a means of mitigating what a
dismissed employee would otherwise claim are his or her economic damages from
the dismissal.

In 2008, the Supreme Court of Canada reached a decision (Evans v. Teamsters
Local Union No. 31) which caused this area of the law to become more uncertain.
In that case, the court held that a terminated employee failed to mitigate his
loss after refusing his employer’s offer of re-employment, five months after he
was dismissed. This decision lead both dismissed employees and legal
practitioners to wonder how far the obligation to accept continued employment
from an existing employer, even if terms and conditions of employment change,
extends.

Recently, the British Columbia Court of Appeal was called upon to grapple
with that issue in Sifton v. Wheaton Pontiac Buick GMC (Nanaimo) Ltd. In the
context of a constructive dismissal, the appellate court distinguished Evans,
and found that it was not unreasonable for Mr. Sifton to refuse his former
employer’s offer of re-employment, given the fundamental nature of the changes
to the terms of his employment but, more importantly, due to the acrimonious
workplace environment existing at the time of termination.

At trial, the judge found that the reduction in Mr. Sifton’s income, from
$78,000 to $60,000, following financial hardship experienced by the dealership,
was significant, and that his move back to a technician level position, with the
associated loss of his shop foreman/manager position, constituted fundamental
changes to his employment contract, amounting to a constructive dismissal. The
trial judge further concluded that Sifton’s period of reasonable notice was 14
months, and based his award of damages in lieu of notice accordingly. He used
Mr. Sifton’s regular pre-reduction income for determining damages.

The dealership, at trial, had taken the position that Sifton resigned his
employment.

Following the trial, the dealership appealed to the British Columbia Court of
Appeal. Its primary argument was that the trial judge erred in concluding that
Mr. Sifton had not failed to mitigate his damages by refusing its offer of
re-employment, and that the trial judge misapprehended and overlooked evidence
relevant to mitigation.

After reviewing the applicable case law, the British Columbia Court of Appeal
concluded:

…Mr. Sifton was offered a job that was dramatically different than
the job he had been doing for 11 years at a significantly lower rate of pay.
Further, the relationship between Mr. Sifton and Mr. Gordon was not “cordial”.
Mr. Braun described the meeting between the two as “tense”. While I do not
accept Mr. Gordon was in “a tirade”, it is clear that he was an assertive and,
at times, insensitive individual. There is no question that Mr. Sifton was
unhappy about the change to his position and had difficulty hiding it; since Mr.
Gordon would not “tolerate negativity” it is unclear how he and Mr. Sifton could
have functioned harmoniously in the workplace.

 

In rejecting the dealership’s appeal, the court emphasized that these types
of cases must be decided on an individual, case by case basis, and a particular
factor, which may be important or even overriding in one case, will not
necessarily be as important in another.

In reaching its conclusion, the Court of Appeal in British Columbia
distinguished the Evans decision. It did so having in mind that the workplace
environment for Mr. Sifton had deteriorated, and the effect of returning him to
the work force would be incongruent with a civil and decent working
relationship. Leaving an employer and asserting constructive dismissal can still
amount to a high risk situation for a departing employee. Not only will the
employer typically assert that, from their point of view, the employee has quit,
but may go further and assert that the employee has failed to mitigate his or
her economic loss, as claimed, by not either staying in the job or accepting an
offer of re-employment.

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Norman Grosman tackles your employment law dilemmas regularly on Workopolis.
More information about him and his legal services can be found on his website grosman.com