A Labour & Employment Law Update

9-July-2008

In a recent decision involving a business agent suing his trade union employer, the Supreme Court of Canada has confirmed that, in some cases, both wrongfully terminated and constructively dismissed employees will be expected to continue working for the dismissing employer to satisfy their duty to mitigate damages.

When a new executive was elected, the employee, who had been employed for 23 years, received a letter of termination. That led to a series of negotiations. The employee’s lawyer said that the employee was prepared to accept 24 months’ notice of termination and suggested that this could be granted through 12 months of continued employment followed by a payment of 12 months of salary in lieu of notice. But no resolution was reached. The employee then received a letter from the employer's legal counsel requesting that he “return to his employment . . . to serve out the balance of his notice period of 24 months” and stating that, if he refused to return, the employer would “treat that refusal as just cause, and formally terminate him without notice”. The employee indicated he would return to work provided the employer immediately rescinded its termination letter of January 2003, but the employer was not prepared to do so.

Was the employee entitled to damages or was he wrong to refuse to continue working? Was there a failure to take reasonable steps to mitigate which meant he was entitled to no damages?

The employee's claim for damages was dismissed because the Supreme Court of Canada concluded that he failed to take reasonable steps to mitigate his damages. The Supreme Court of Canada confirmed that in some cases, including this case, dismissed employees may have failed to mitigate their damages by not accepting employment with the same employer where the salary offered was the same, the working conditions were not substantially different, the work was not demeaning, and the personal relationships were not acrimonious. The Court also said that a court should consider the history and nature of the employment, whether the employee has commenced litigation, and whether the offer of re-employment was made while the employee still worked for the employer. The Court further commented that an employee should not be obligated to mitigate by working in an atmosphere of hostility, embarrassment, or humiliation.

There will obviously be many cases when an employee would not be expected to stay with his/her employer after termination, however, it is very significant to have the Supreme Court of Canada confirm that in some cases an employee will be expected to stay working for their employer after termination. Knowledge of this concept may assist employers to avoid or reduce liability in a variety of situations, and may be particularly useful when an employee is claiming constructive dismissal.

This update is a general overview of the subject matter and cannot be regarded as legal advice. Please contact Vicki Giles in Edmonton, Tom Ross in Calgary, Glenn Tait in Yellowknife, or any member of our Labour & Employment Practice Group for advice on this or any other labour & employment law topic.