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To mitigate or not to mitigate? That is the question

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Often times in a constructive dismissal situation where an employee is demoted, the affected employee will have to decide whether or not they are required to accept the demoted position in order to mitigate any damages that they seek arising from the constructive dismissal.

In the recent case of Dunstan Morgan v. Vitran Express Canada Inc. 2015 ONCA 293, the Court of Appeal found that the trial judge had appropriately considered and applied the principles enunciated in Evans v. Teamsters Local Union No. 31, 2008 SCC 20, 2008 1 SCR 661 in which a dismissed employee’s obligation to mitigate damages must be met by returning to work for the same employer.

In concluding that Morgan’s decision not to return was reasonable, the trial judge explored the following:

  1. What was the quality of the work environment?
  2. Whether the work offered was of lesser importance than the job currently held.
  3. Would the employee have suffered a loss of dignity in the eyes of the employees he used to supervise?
  4. Had the employee been treated in an unacceptable manner by the employer in the period leading up to the constructive dismissal?
  5. Were the employee’s personal relationships with his supervisors acrimonious?

While the above-noted factors remind us of the appropriate questions to be asked in making a determination on whether it would be reasonable to accept the replacement employment being offered, of particular interest to me was one of the arguments submitted in the appeal by Vitran in attempting to demonstrate that that the trial judge had erred. Vitran submitted that the trial judge should have heard evidence from other veteran employees about how they would have viewed Morgan’s transfer in order to determine whether Morgan would have suffered a loss of dignity in their eyes.

The Court of Appeal indicated that they saw no merit in the submission. The Court of Appeal stated that when the trial judge considered the evidence of the nature and conditions of Morgan’s employment – the work atmosphere, his treatment over the years by his supervisors, and the nature of the newly created position – it was open to the trial judge to conclude in all circumstances that Vitran had not met the objective test of demonstrating that a reasonable person in Morgan’s position would have accepted the offer.  It was not necessary for the trial judge to hear evidence from other employees to determine whether he would have suffered a loss of dignity in their eyes.

As a result, the finding was that it was reasonable for Morgan to reject Vitran’s offer of a new position in mitigation of damages.

This case acts not only as a reminder of the questions to be asked in assessing whether an employee should accept a job from their employer in order to mitigate damages, but also serves as a reminder that all circumstances viewed in the collective are to be taken into consideration when making such an assessment.

Patrizia Piccolo

About the Author: Toronto Employment Lawyer Patrizia Piccolo is a trusted advisor to senior executives in transition; provides strategic advice and training to both large and small employers and their human resources and management teams; and is entrusted by employers and their counsel to conduct investigations into harassment and other problematic workplace behaviour. She also advises employers on employment related regulatory issues including, Employment Standards Act, Human Rights Act, Labour Relations Act and Workplace Safety and Insurance Act compliance.