You’ve been a valued employee for 18 years. One day you’re told that your position is being eliminated at the end of the month but that another job at a related company is available – the same kind of position with the same pay. You’re upset and not thinking clearly and you turn down the replacement job offer. You sue for wrongful dismissal. You eventually find other work but at a much lower position and salary. When the events are replayed at trial and are viewed more objectively, you realize that you should have taken the offered position, that in failing to do so you didn’t mitigate your losses and your action for wrongful dismissal will probably not succeed.
With these words, Mr. Justice Edward Belobaba of the Ontario Superior Court of Justice dismissed a wrongful dismissal action brought by Aleem Ghanny. The written reasons for judgment can be found at Ghanny v. 498326 Ontario Ltd.,  O.J. No. 2698 (S.C.J.).
In June 2008, Ghanny was informed by his employer that his job as Service Manager at Toronto’s Downtown Toyota would be eliminated at the end of the month. He was also told by the employer that he would be relocated to Downtown Suzuki, a recently acquired and related dealership situated only a few blocks away. He would continue as Parts and Service Manager and not suffer any reduction in compensation as a result of being relocated.
Ghanny refused the Parts and Service Manager job. He believed that his 18 years of service with the employer would not be recognized if he accepted the job and, also, that the future of the Downtown Suzuki dealership was uncertain. Based on what he had been told, Ghanny was of the view that the dealership would only remain open for another 9 to 18 months.
The employer reassured Ghanny that he was considered an excellent employee and his help was needed at Downtown Suzuki. The employer made it clear that his seniority would continue to be recognized and whatever the future of the Suzuki dealership, his employment was not at risk.
Ghanny ended up suing his employer for wrongful dismissal. He made reasonable efforts to find alternative employment and, within a number of months, found a job first at a Nissan dealership and then at a Mercedes Benz dealership. It was a lower level job with reduced compensation.
The employer defended the wrongful dismissal action on the basis that “[t]he plaintiff failed to mitigate in not taking the Suzuki position … and thus no damages should be awarded”.
Decision of Ontario Superior Court of Justice
Mr. Justice Belobaba began his analysis by stating that an employee similarly situated to Ghanny – i.e. an employee who “was 47 years old, had worked [for the same employer] for 18 years (4 years as a Service Advisor and 14 years as the Service Manager) and was losing his job just as the financial crisis was starting” – would be entitled to 14 months of notice or pay in lieu of notice on termination of employment.
However, on the facts before him, the trial judge concluded that Ghanny’s wrongful dismissal action could not succeed. He stated:
In short, I have no difficulty finding that Mr. Ghanny failed to mitigate his damages by turning down the position at Downtown Suzuki.
Had he accepted the position at Downtown Suzuki he would not have suffered any losses flowing from his dismissal from Downtown Toyota. He is therefore not entitled to damages.
Mr. Justice Belobaba framed the legal test as follows: “Where the employer offers the employee a chance to mitigate damages by returning to work for him or her, the central issue is whether a reasonable person would accept such an opportunity.” The test is one of reasonableness and the assessment of whether or not the employee has satisfied the duty to mitigate is made “on an objective standard”.
Focusing on the facts of the case, the trial judge found:
… Mr. Ghanny’s refusal to accept the Downtown Suzuki position was unreasonable when viewed objectively. It was the same kind of job with the same pay. Ghanny acknowledged in his evidence that he knew he probably wouldn’t find another job as Service Manager that paid $80,000. The dismissing employer wanted him to accept the Suzuki position – he was a valued employee. There is no suggestion that the working conditions at Downtown Suzuki were demeaning or that Mr. Ghanny’s relationship with [the employer] … had become difficult or acrimonious.
Significantly, Mr. Justice Belobaba was clear that his conclusion would have been no different had the employer refused to recognize Ghanny’s seniority at the Suzuki dealership. He explained:
Even if I had accepted Mr. Ghanny’s evidence that he would have to “start fresh” and would end up losing his 18 years of service, I would still have come to the same conclusion. Mr. Ghanny’s refusal of the replacement job offer at Downtown Suzuki – same position, same pay, no intangible reason not to take it – was objectively unreasonable. Even if the replacement job had only lasted nine months (before the Suzuki dealership was closed) that was still nine months of reasonably required mitigation …
Lesson for HR professionals …
The most valuable lesson to be learned from Ghanny v. 498326 Ontario Ltd. is that even if an employee can successfully establish that he or she has been wrongfully dismissed from employment, the employee must also be able to establish that he or she has satisfied the duty to mitigate.
This may include taking a job offered by the dismissing employer. If the job put on the table by the dismissing employer is a bona fide one – the same kind of job with the same or roughly the same compensation and working conditions, and the work environment is not hostile, embarrassing or humiliating – the employee will more likely than not be expected to take the job.
The employee otherwise risks a finding at trial that he or she has failed to mitigate and this, as experienced first hand by Ghanny, can have a significant impact on the outcome of wrongful dismissal litigation.
For further information, contact:
James D. Kondopulos
Partner (Practising through a law corporation)
Roper Greyell LLP