Ever since the Supreme Court of Canada decision in 2008 in a case Evans v. Teamsters Local Union, the courts have recognized the obligation of an employee, in certain circumstances, to accept an offer of alternate employment from their employer following dismissal. This has put many employees in the awkward position of determining whether or not the offer of employment is one that must be accepted based on the Evans’ reasoning. The difficulty faced by many employees’ counsel is the degree of difference in the position being offered, and whether such difference justifies the employee rejecting the offer of employment.
That dilemma has been somewhat lessened by a recent decision of the Ontario Court of Appeal which clarifies the extent to which a job will be considered similar to that which was lost. This decision released on March 7, 2014, dealt with the dismissal, or constructive dismissal of the Vice President of Operations of the defendant company. In the case of Farwell v. Citair Inc., Mr. Farwell had been employed by Citair for 38 years, and was 58 years old at the time of his dismissal. Mr. Farwell had held the position of V.P. of Operations when Citair decided to eliminate that role and put Mr. Farwell in the position of Purchasing Manager. According to the evidence, the salary and benefits were almost identical in the new role, as were the working conditions. It is indicated that the only significant change in compensation was a reduction in Farwell’s bonus entitlement. What was important for the trial judge, and accepted by the Court of Appeal, was the fact that Farwell would be reporting to someone who held the position which he had previously held.
Having accepted the trial judge’s finding that there was a constructive dismissal, the Court of Appeal went on to consider the employer’s argument that Farwell could have mitigated his damages almost fully by accepting the Purchasing Manager’s position.
The Court of Appeal referred to the Supreme Court of Canada decision of Evans v. Teamsters for the proposition that the employer has the onus of proving failure to mitigate. In order to meet this onus, the employer must show that the employee did not make reasonable efforts to find a job, and that a comparable job was available at the time of dismissal. Where the comparable job is, in fact, with the same employer, different considerations will apply. In particular, if taking a job with the same employer would expose the employee to an “atmosphere of hostility, embarrassment or humiliation…” the employee is not obligated to accept that position. The difficulty is determining what positions fall within that description. In this case, the trial judge had found that requiring the plaintiff to accept a position that he had held years earlier would be embarrassing and humiliating. The trial judge was strongly influenced by the fact that the plaintiff would now be reporting to someone who had previously been his subordinate. Therefore, the trial judge granted judgment to the plaintiff and rejected the argument of failure to mitigate.
The employer appealed, and on the appeal argued that as the dismissal had nothing to do with the employee’s performance, nor any difficulties with management, there was no reason why the employee should not have agreed to accept the position offered to him. The employer argued that the dismissal was based largely on economic reasons which did not give rise to any ill will between the employee and the company.
In upholding the trial decision and accepting the argument of failure to mitigate, the Court of Appeal characterized this requirement as an “efficient breach” of contract. In other words, the court found that requiring employees to accept such positions would increase economic efficiency in breach of contract cases.
What then is the take away from this Court of Appeal decision?
Employers will be able to reduce their exposure to liability in dismissal situations when they do make bona fide offers of re employment in similar roles. The court will look not only at the compensation being offered but also the degree of responsibility, reporting requirements, and working conditions. Departing employees should bear this decision in mind prior to rejecting any such offer from an employer as they run the risk of disentitling themselves to any compensation for the termination of their employment.
