Labor & Employment Law

Mitigation in Employment Law

By Michael Fitzgibbon

We know that a terminated employee has an obligation to mitigate his or her damages by making reasonable efforts to find other work.  But what about an employee who is dismissed, without cause, and subsequently offered his or her old position for a temporary (or even permanent) period?  Must the employee accept this offer in mitigation of his alleged damages?  What are the implications of the former employee's failure to accept the job offer?

The Supreme Court of Canada considered this very issue in Evans v. Teamsters Local Union No. 31. 

Mitigation cases have, by and large, been unkind to employers, but Evans seems to establish a more rigorous standard on the employee.  Time will tell whether this is so, but the majority of the Court seems to adopt a somewhat more relaxed mitigation-standard than was previously the case.

The Court establishes an objective test for deciding if it was reasonable for the employer to accept or decline the employer's job offer.  Mr. Justice Bastarache observed that:

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. ... Thus, although an objective standard must be used to evaluate whether a reasonable person in the employee?s position would have accepted the employer?s offer (Reibl v. Hughes, [1980] 2 S.C.R. 880), it is extremely important that the non-tangible elements of the situation ? including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment, the tangible elements ? be included in the evaluation.This approach is significant, though possibly not such a significant departure from prior case law as may be assumed.  In reaching this conclusion, the court hangs-its-hat on the decision of the Ontario Court of Appeal in Mifsud. 

Also significant is the fact that the Court observed that Wallace damages are not subject to mitigation.  This is an important observation given that there had been some controversy in the case law on this point. 

Again, these are early days, and it remains to be seen how the Evans case plays out in practical terms, whether it will be as significant as some are predicting and whether employers change their tactics in dealing with terminations to account for the Evans approach.

There's a discussion of the case in the Lawyer's Weekly.

Full post as published by Thoughts from a Management Lawyer on May 07, 2008 (boomark / email).