In Northern Air Charter (PR) Inc v Dunbar, an employee was dismissed from his employment and, several months later, offered the opportunity to return to his position without backpay. The employee refused, and pursued a claim for wrongful dismissal. The employer argued that by refusing to accept its offer to return him to his former position, the employee had failed to mitigate his damages. The trial judge disagreed, and that conclusion was recently upheld by the Alberta Court of King’s Bench.
The Duty to Mitigate
All employees who are dismissed have a duty at common law to mitigate their damages by finding comparable replacement employment as quickly as possible. In some cases, this may include accepting an offer to return to work for the same employer. The Supreme Court of Canada noted in its oft-cited decision in Evans v Teamsters Local Union No 31 that it is reasonable to expect dismissed employees to accept an offer to return to work for the same employer “in the absence of conditions rendering the return to work unreasonable”.
When Can an Employee Refuse?
In Evans, the Supreme Court of Canada recognized that an employee should not always be required to return to work for their former employer in order to mitigate their damages. The question is whether a “reasonable person” would accept such an opportunity. This means that courts will consider from an objective perspective whether the employee should have accepted the offer or not.
Courts in Ontario have noted that a reasonable person would accept an offer to return “[w]here the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships involved are not acrimonious”. Critically, an employee will not be expected to mitigate their damages by working in a hostile, abusive or demeaning work environment.
The Reasoning in Northern Air
In this case, the employee had been out of work for two and a half months at the time that the employer offered him the chance to return to work. Despite this, the employer did not offer to provide the employee with any back pay for the time he had been off work. The court noted that this would have placed the employee in the awkward position of “either giving up his legal claim for notice, or being engaged in legal proceedings with his employer.” As a result, the trial judge concluded that a reasonable person would not have accepted the offer of employment in the circumstances – a finding that the Court of King’s Bench upheld on appeal.
Key Takeaways
Offering an employee the opportunity to return to their position can be a powerful option for employers facing a wrongful dismissal claim. However, in order for a refusal of such an offer to constitute a failure to mitigate on the part of the employee, the offer has to be reasonable. Offering an employee a lesser title or compensation or asking them to return with no attempt to compensate them for the losses they have already experienced will result in the outcome that we saw in Northern Air. Furthermore, the employer should consider the environment they are asking the employee to return to. Are the circumstances such that a “reasonable person” would agree to return?
Employees who are presented with the opportunity to return to work following a dismissal should not reject the offer out of hand assuming that it will not impact their case. An employee who fails to accept an offer to return to work, even if the circumstances are somewhat uncomfortable, may have failed to mitigate their damages. This can result in a reduction in the potential damages the employee may otherwise have been entitled to.
The bottom line is that both employers and employees should seek legal advice in situations where there is potential for the employee to return to work. If you are faced with this situation, we encourage you to contact us before taking action to ensure the best outcome in the circumstances.
