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Constructive Dismissal and Mitigation

In determining whether a constructive dismissal has occurred, the leading case of Farber¹ paraphrased states, "that there must be a unilateral change imposed by the employer that substantially alters the essential terms of the employee's contract of employment." A court will need to see whether at the time the offer was made, a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were being substantially changed.

The case of Evans² dealt with constructive dismissal and the legal obligation of employees to mitigate their damages and specifically, whether an offer of re-employment by the employer to the employee needs to be accepted to fulfill the duty to mitigate.

In the Evans case, Evans was dismissed. Following being notified of the dismissal, Evans informed the employer that he was prepared to accept 24 months notice of termination through 12 months of continued employment and then a further 12 months of salary in lieu of notice. The employer responded by saying that they wanted Evans to work the entire 24 months notice period. Evans refused the offer and was terminated.

The court stated that where an offer of reemployment is made and ultimately a chance for an employee to mitigate damages, the issue is whether a reasonable person would accept such an opportunity.

The court found that, "(paraphrased) a reasonable person will be expected to do so where the salary offered is the same, the work conditions are not substantially different or demeaning and the personal relationships involved are not acrimonious."

In the constructive dismissal context, "the offer of reemployment may be reasonable to accept as long as the working environment is not hostile or one that subjects the employee to embarrassment or humiliation."

Therefore, in the constructive dismissal context, an employee may well be advised to consider the offer or reemployment as a form of mitigation by accepting the employment, maybe only as temporary employment. If an employee fails to do so, it might deprive the employee of a portion of damages they may have been entitled to in a constructive dismissal action

¹ Farber v. Royal Trust Co. [1997] 1 S.C.R. 846

² Evans v. Teamsters Local Union No. 31 [2008] 1 S.C.R. 661

The information provided is intended solely for discussion purposes and is not intended to be a legal opinion, and you should obtain legal advice from your lawyer.

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