Sometimes, after an employee is constructively dismissed or terminated, the employer later offered them a job at the same company. In this situation, it is important for the employee to understand the potential consequences if they refuse the position and fully consider whether it is reasonable for them to accept it.

Employee’s Duty to Mitigate

In the case of wrongful dismissal, the employee has a duty to mitigate their loss, either by seeking out comparable jobs or accepting another offer from the same employer. If a court finds that an employee has failed to take reasonable steps to mitigate their loss, even if they are successful in establishing the wrongful dismissal, the court will reduce their entitlement to damages.

A recent example of an employee losing part of their entitlements in a successful constructive dismissal case is Gent v Strone Inc., 2019 ONSC 155. In this case, the temporary layoff of the employee constituted a constructive dismissal, but the court found that when the employer recalled him back to work, the employee failed to mitigate his damages by rejecting that offer. The employee stated that it would be embarrassing, humiliating and degrading for him to return to work. The Court held that from a reasonable person perspective, someone in the employee’s circumstances would not have concluded that returning to work would be too embarrassing, humiliating and/or degrading. The Court also found that the employer was recalling the employee to the position he held prior to layoff on the substantially same terms and conditions, and the employer assured the employee that  he would be treated normally with no reprisals or hard feelings.

Test for Whether it is Reasonable to Accept the Position

Where an employer offers an employee a chance to mitigate damages by accepting a different position, it can be challenging for the employee to determine whether they are obligated to accept under that particular circumstance. The test was elaborated in Brake v PJ-M2R Restaurant Inc., 2017 ONCA 402. In this case, the employer alleged that the employee did not meet performance standards, and proposed to demote her to first assistant. The employee refused to accept demotion and was fired for cause. The Court held that the employee did not fail to mitigate.

The Ontario Court of Appeal quoted from Evans v. Teamsters, Local 31, 2008 SCC 20, that “[w]here an employer offers an employee a chance to mitigate damages by accepting a different position, the central issue is whether a reasonable person in the employee’s position would have accepted the offer.” The employee is not obliged to mitigate by “working in an atmosphere of hostility, embarrassment or humiliation.” There are two categories of elements to consider in this analysis, the non-tangible and the tangible. The non-tangible elements include work atmosphere, stigma and loss of dignity, and tangible elements concern the nature and conditions of employment.

On the other hand, in Evans, the Supreme Court held that the employee failed to mitigate. The employee was wrongfully dismissed, and the employer offered him the opportunity to return to his employment and serve out the balance of his notice period. The employee refused to return to work, unless the employer immediately withdrew its termination letter, which the employer was not prepared to do. The Court held that the employee did not act reasonably, as a reasonable person would have viewed the offer as bona fide employment opportunity. In addition, the relationship between the employer and employee was not seriously damaged, and the terms of employment were same.

Employer Bears the Burden to Prove Failure to Mitigate

If an employee rejects the employer’s offer of alternate work, the employer bears the burden of proof to establish that the employee has failed to mitigate their loss by doing so. This burden of proof is onerous. Furthermore, as the Supreme Court quoted in Evans, “[i]n case of doubt, the plaintiff will usually receive the benefit, because it does not lie in the mouth of the defendant to be over-critical of good faith attempts by the plaintiff to avoid difficulty caused by the defendant’s wrong.”

In conclusion, the answer to whether an employee should accept a different position offered by their employer can be fact-specific. The key is to be mindful that there exists a duty to mitigate and the test is an objective analysis based on what a reasonable person will do. For someone faced with this situation, when in doubt, it is advisable to obtain legal advice.

Stacey Reginald Ball is an experienced employment lawyer with Ball Professional Corporation.  Our office is located in Toronto, Ontario, and handles various employment law matters, including wrongful dismissal.  If you have questions regarding employment law issues, please call our office at (416) 921-7997 ext. 225.