“Clear out your office. Actually, on second thought, can you start on Monday?"

It will often be clear, at least from an employee’s perspective, that the termination of his or her employment without legal cause (i.e.: not as a result of the employee’s conduct) was carried out improperly or unfairly. Lack of cause, lack of notice period, or even prohibited grounds all signal to a fired employee that there may be a good case for claiming “wrongful dismissal” against the employer. The clarity rapidly disappears, however, if the employer throws a curve ball and offers the employee his or her job back. What is expected when the employer attempts to re-hire a dismissed employee? What obligation does an employee have to accept such an offer?

The law in play in such a scenario primarily surrounds the employee’s obligation to mitigate or minimize his or her loss flowing from the employer’s termination. Discharging the duty is an essential component to the employee’s wrongful dismissal claim. How mitigation applies to a scenario like the one above was recently clarified by the Supreme Court of Canada in Evans v. Teamsters Local Union No. 31 (“Evans”). In this case, the Supreme Court of Canada decided that a wrongfully dismissed employee’s obligation to mitigate his or her loss requires accepting re-employment with the original employer, provided certain conditions are met. In the presence of these conditions and the absence of other mitigation efforts, declining re-employment will result in the employee’s failure to discharge the duty to mitigate, thereby operating as a bar to any damage award sought by the employee.

In Evans, the plaintiff, Donald Evans, was employed with the defendant employer in the position of business agent for 23 years until his employment was terminated without notice or cause by the newly appointed President of the union. Over the next five months, his counsel attempted to negotiate with the union for an offer of a reasonable notice period, but no agreement was reached. Evans was then offered re-employment with the union. Apparently unhappy with his treatment, Evans turned down the offer. Soon after, Mr. Evans commenced an action for wrongful dismissal against his former employer.

At trial, Mr. Evans successfully proved his claim and was awarded damages in lieu of a notice period of 22 months in salary and benefi ts. The Yukon Court of Appeal overturned this decision, and set aside the entire damage award. The Supreme Court of Canada affi rmed the ruling of the appeal court. The Court held that an employee’s obligation to mitigate loss in termination situations is essentially designed to ensure that the eventual damages in lieu of notice are not paid unnecessarily. The whole logic of a notice period rests on the assumption that it is going to take roughly that amount of time for a particular employee to find alternative income. If an employee can fi nd employment sooner, he or she must mitigate his or her loss and take it; the dismissing employer should not be required to compensate an individual who elects not to pursue the reasonable course. Otherwise, the payment would constitute a ‘punishment,’ when wrongful dismissal damages are meant solely to compensate the employee for the lack of notice period, not to punish the employer for the dismissal.

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Barbara Green is a Partner in the Commercial Litigation Group at Robins Appleby LLP and an Ontario lawyer with over 20 years’ experience in employment law, estates litigation, and commercial litigation. She often represents employers, employees and businesses in complex disputes. Recognized in Best Lawyers Canada, Barbara has been featured on CBC, Global News and Newstalk 1010.

At Robins Appleby, we have been providing legal advice for over 70 years to entrepreneurs, businesses, financial institutions, and foreign companies operating in Canada. Located in Toronto's financial district, our firm is trusted by clients to help solve critical, time-sensitive issues. We offer a wide range of legal services including business and transactions, affordable and social housing, litigation and dispute resolution, commercial real estate development, tax law, employment law, and estate planning.