Employee Refuses to Return to Work After Illegal Layoff – Court Finds Failure to Mitigate

mitigate damages

Losing a job is nerve-wrecking for most people. Employees must be careful, however, because they have a duty to mitigate their damages by taking reasonable steps to find comparable employment. Otherwise, their entitlement to damages for wrongful dismissal may be substantially reduced. Watch my vlog on mitigation to learn more.

Now, what if an employee gets illegally laid off, and then recalled back to work? According to a recent case, Gent v Strone Inc., 2019 ONSC 155, the employee may have to return to work as long as a reasonable person would not have found it “too embarrassing, humiliating, and/or degrading” to do so. If the employee does not return to work, they may be found to have failed to mitigate their damages, and risk receiving a significantly deflated damages award.

Facts

Mr. Gent had been employed by Strone Inc. (“Strone”) for over 23 years when he was temporarily laid off. In 2014, Strone had a significant decrease in its business. In January 2015, Strone permanently laid off 22 employees (with severance packages). In October 2015, Strone temporarily laid off Mr. Gent and two other employees and permanently laid off other employees with severance packages. Mr. Gent knew about the permanent and temporary layoffs and his employer told him that because of the decrease in business, he would be temporarily laid off and recalled to work as soon as possible when business improved.

Mr. Gent’s layoff letter:

(a) stated that Strone would pay 100% of his group benefits during the temporary layoff period, including the premiums that he paid himself;

(b) asked him to keep Strone informed about his ongoing availability and contact information so that it could recall him as soon as possible; and,

(c) asked him to return all of the company’s tools and equipment, including the company car which he would not use while on a temporary layoff.

At the time of Mr. Gent’s layoff, he was 53 years old and held the title of Health & Safety Training Specialist. Later that month, his counsel advised Strone that he considered his temporary layoff to be a constructive dismissal. Strone’s counsel advised that he may be recalled to work, to which Mr. Gent’s counsel immediately replied that Mr. Gent felt the relationship had broken down and that he would not return to work.

In November 2015, Strone recalled Mr. Gent to “active employment”, which he refused.

Mr. Gent brought a motion for summary judgment, claiming that the layoff amounted to constructive dismissal. Strone argued that he was not wrongfully dismissed, and in the alternative that if he was constructively dismissed, he failed to mitigate his damages by refusing a recall to his employment.

Analysis

First, the Court found that Mr. Gent was constructively dismissed in October 2015, because the employment contract did not give Strone the right to temporarily lay him off. The Court thus held that he is entitled to damages for Strone’s failure to provide him with reasonable notice of his termination of employment, subject to his obligation to mitigate his damages.

Second, the Court found that Mr. Gent failed to mitigate his damages when he refused Strone’s offer of work. The central issue is “whether a reasonably objective individual in his circumstances would not have concluded that returning to work would be too embarrassing, humiliating, and/or degrading.” Relevant factors to consider include the work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment.

Here, the employment relationship was amicable before the layoff, and Mr. Gent testified that Strone was a good workplace and that he had enjoyed working there. The Court held that:

[43] … a reasonably objective individual in his circumstances would not have concluded that returning to work would be too embarrassing, humiliating, and/or degrading. Mr. Gent has given no evidence as to how or why he would be “humiliated, embarrassed or degraded”. …

[52] … I find that Strone was recalling Mr. Gent to his position held prior to his layoff on substantially the same terms and conditions of employment. Strone also assured Mr. Gent that he would be treated normally with no reprisals or hard feelings and that Strone considered him to be a valued employee.

Third, the Court held that Mr. Strone was thus entitled to damages of $4,846.50 from the date of his termination of employment to the date he could have commenced employment with Strone, a mere 3.5 weeks. If he had not failed to mitigate, the relevant factors would have supported an award of a notice period of 18 months.

Takeaways

This decision should serve as a valuable lesson for both employers and employees.

Employers should take note that Strone was able to avoid more than $100,000 in damages by offering to recall the long-term employee early on in the reasonable notice period. We assist employers during the termination process, including providing our opinion regarding the employee’s entitlement, presenting options and preparing dismissal letters. We often assist employers after the fact, when they do things like lay someone off when they don’t have the right to do so. Employers should remember that they do not have an automatic right to lay off employees; however, if they want that option then they can include that in the employment contract.

Employees should take note that even if they have been dismissed or constructively dismissed, they have a duty to mitigate, which can include accepting an offer of re-employment. Failing to do so can constitute a failure to mitigate damages and dramatically impact their legal position. If you have been wrongfully dismissed, we can assess your situation, determine if you have been constructively dismissed, and then work with you to determine the most effective strategy to enforce your rights.

We always recommend that both employers and employees seek legal advice in order to ensure that they are meeting their obligations and getting what they are entitled to.

Nadia Zaman

I am an associate at Rudner Law. I am thrilled to be a part of the employment bar and have been elected to the executive committee of the Ontario Bar Association’s Labour and Employment Law Section, where I serve the interests of the profession and the public.