An employee dismissal creates a two-way street of obligations. The employer is required to provide the employee with reasonable notice of the dismissal or pay in lieu of this notice (unless restricted by contract). The employee is required to make reasonable efforts to mitigate their losses by locating a similar position to the one they filled prior to their dismissal.
If the employer can show that the employee would have found a job by making a reasonable effort but failed to do so, the Court may reduce the employee’s entitlement to reasonable notice. One way for the employer to accomplish this is by offering the employee their role back for the notice period, or a similar role to the one the employee lost. The standard of review that the Court will apply is whether a reasonable person offered the same role would have accepted it.
This leads to the question: what kind of job offer will the court count as an opportunity to mitigate, and does the timing of when this offer was made impact whether this is a reasonable mitigation opportunity?
The Court of Appeal of Manitoba has confirmed, in Brown v General Electric Canada, that a comparable job offer extended by a successor employer before an employee’s dismissal can be a reasonable mitigation opportunity, and an employee who fails to accept it will be deemed to have failed to mitigate their losses.
The Facts in Brown v General Electric Canada
Mr. Brown, the plaintiff, founded a company in 1992. The defendant, GE Electric Canada (“GE”) purchased that company in 2016. The purchase included a $300,000.00 retention bonus if Mr. Brown remained employed with GE for the next five years. In 2018, GE sold its transportation division, including Mr. Brown’s current role, to Wabtec Corporation.
In February 2019 Wabtec extended an offer of employment to Mr. Brown under which the terms of his employment would continue without change, including:
- recognition of his prior service,
- his current title,
- reporting structure,
- compensation, and
- benefits.
This offer did not include reference to the retention bonus.
Mr. Brown met with GE’s management to discuss the sale, and was advised that Wabtec would honour the retention bonus as part of the transition. Mr. Brown’s final discussion with GE included reference to having the retention bonus included in the offer letter.
Despite this, Mr. Brown did not accept the offer, instead advising GE that while he was not terminating his employment with it, he would not accept the offer of employment with Wabtec as it had been presented to him. When the deal closed, Mr. Brown did not become an employee of Wabtec and instead subsequently sued GE for wrongful dismissal.
Mr. Brown was partially successful at trial, with the Court awarding him $133,000.00, representing his prorated entitlement to the retention bonus. The Court dismissed Mr. Brown’s claim for further damages in the amount of $763,640.84. The Court noted that Wabtec’s offer of continued employment to Mr. Brown was an offer of comparable employment, and that GE had disposed of its onus to show that by not accepting it Mr. Brown had failed to observe his mitigation obligations. Mr. Brown appealed.
The Court of Appeal’s Decision to Dismiss
The Court of Appeal agreed with the Trial Judge, with the Court noting that the role offered was identical to the position that Mr. Brown had held at GE. The Court also noted that Mr. Brown’s employment had not been terminated in a negative way such that his acceptance of a role would have been humiliating.
Finally, the Court found that the offer of employment coming prior to Mr. Brown’s dismissal was not material to its analysis. The Court noted that Wabtec wanted Mr. Brown to continue his employment with, and that based on the evidence, particularly that Wabtec did not fill Mr. Brown’s role, it could be inferred that if Mr. Brown had changed his mind about the role, it would have extended the offer of employment again.
The Court of Appeal dismissed the appeal, leaving the original damages award intact. Despite multiple decades of employment, Mr. Brown received no award of reasonable notice at common law.
Takeaways
Earlier decisions on mitigation have confirmed that an employee is not obliged to accept a position with lower compensation or worse terms of employment than the role that the employee held prior to their dismissal.
Here, both levels of Court confirmed that the offered role was identical to the position that Mr. Brown had lost at GE, and that Mr. Brown had no reasonable basis to reject the offer. In the trial decision the Court notes that Mr. Brown’s primary refusal to reject the offer was due to his concern regarding receipt of the retention bonus.
Interestingly, neither decision addresses what the new agreement included regarding Mr. Brown’s entitlements on dismissal; it is possible that his agreement with GE did not limit his entitlements to anything less than the common law, and the agreement with Wabtec may have. This would have represented a significant change between the value of the two agreements and may have been a reasonable basis for Mr. Brown to reject the offered employment.
Whether this case will change the law or be seen as a fact-specific anomaly remains to be seen. For the moment, it stands as a good reminder that the duty to mitigate must be taken seriously, and failing to do so can have severe consequences for an employee’s wrongful dismissal.
We work with employers and employees to respond to and bring claims of wrongful dismissal. We are here to assist you in navigating these complex legal issues, because as we always say: if you think you need an Employment Lawyer, you probably do!
