Canada: Getting Back Together With An Ex: Constructive Dismissal And Offers Of Re-Employment

In the recently released Ontario Superior Court of Justice decision, Gent v. Strone Inc., 2019 ONSC 155, the Court reaffirmed that an employee's duty to mitigate may well include accepting an offer of re-employment with his or her former employer.

Facts

The plaintiff, a 50-year old employee with 23 years of service, was issued a notice of temporary layoff due to a decline in business. At the time, the plaintiff was told that he would be recalled as soon as possible after business improved.

Some two weeks later, the plaintiff's lawyer sent a demand letter, claiming that the temporary layoff constituted a constructive dismissal. Within a few days, the employer's legal counsel advised that there was a possibility the plaintiff would be recalled shortly. Surprisingly, the plaintiff's counsel immediately wrote back and advised that his client felt the relationship had broken down and he would not be returning to work at the employer.

Less than two weeks later, the plaintiff was recalled to "active employment". The plaintiff refused the recall, taking the position that it would have been "embarrassing and degrading" for him to return to work. The plaintiff subsequently commenced an action alleging constructive dismissal.

Argument and decision

The plaintiff argued that there was no term in his contract of employment that allowed the employer to lay him off temporarily and also took the position that the offer of re-employment was a sham. He claimed 24 months of pay in lieu of notice.

The Court found that the plaintiff had been constructively dismissed, noting that there was no contractual right in the employer to temporarily lay off the plaintiff. The employer had violated a fundamental term of employment by failing to provide the plaintiff with work and compensation during the period of layoff.

The main point of contention was whether the plaintiff had failed to mitigate his damages by refusing the offer to return to work. Reviewing the Supreme Court of Canada's seminal decision in Evans v. Teamsters, Local Union 31, 2008 SCC 20, the Court confirmed that when assessing the reasonableness of a re-employment offer, one should look at whether the salary offered was the same, the working conditions were substantially similar, the work was not demeaning, and the relationships involved were not acrimonious.

The Court concluded that the employer's offer of re-employment was reasonable and should have been pursued by the plaintiff. The plaintiff was being recalled to the position he held prior to his layoff on substantially the same terms and conditions of employment. In evaluating the evidence, the Court found that a reasonably objective individual in the plaintiff's circumstances would not have concluded that returning to work after 3.5 weeks was too embarrassing, humiliating and/or degrading.

The Court held that due to the plaintiff's failure to mitigate his losses by accepting re-employment, he was only entitled to damages from the date he was laid off to the date he was offered re-employment, a period of just 3.5 weeks. Had the plaintiff not failed to mitigate his damages, he would in all likelihood have been entitled to a reasonable notice period of 18 months.

Lessons for employers

This case is a good reminder that employers do not generally have a free-standing right to temporarily lay off employees as they see fit.

The right to lay off must be expressly provided in the employment contract. If there is no such contractual right and the employer imposes a temporary layoff on an employee, the employee is entitled to treat the layoff as a constructive dismissal

Further, this case highlights that when facing liability for wrongful or constructive dismissal, employers might consider offering re-employment to limit their exposure to damages. An employee will only be required to accept re-employment where it would be reasonable for him or her to do so in the circumstances.

Originally published in the LexisNexis Labour Notes Newsletter.

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