Is Refusing An Offer of Re-Employment Failure to Mitigate Damages?
If an employee is terminated and subsequently receives an offer of re-employment from the terminating employer, is s/he obligated to take the offer? Will s/he be found responsible for having failed to mitigate the losses arising from the termination of her/his employment?
As many of you know, there is no fundamental right to job security in employment. However, while employed the employee is entitled to be paid for the services that are provided. The employer is entitled to terminate the employment but the employee, subject to contractual arrangements, will be entitled to reasonable notice or payment in lieu of notice. That payment, of course, will be reduced by monies that the employee earned if s/he finds subsequent employment during the notice period. The employee may not, however, sit idly by without trying to work. Doing so would constitute failure to mitigate her or his loss of income.
That does not mean that an employee must accept any offer of employment. The test of whether the particular employment should have been accepted is whether a reasonable person would have accepted the employment. This applies whether the employment is with a new employer or is re-employment with the former employer. An employee is not obligated to mitigate his or her damages in a situation that is hostile or demeaning.
Recently, the British Columbia Court of Appeal overturned a trial decision on the issue of mitigation by re-employment. In Frederickson v Newtech Dental Laboratory Inc., 2015 BCCA 357, it ruled that the breakdown of trust between the employer and the former employee was a crucial element for the court's consideration.
The former employee had been employed as a dental technician for eight and a half years. She took a medical leave related to the stress she was experiencing due to her husband's illness and her child's accidental injury. The employer disputed that the employee was entitled to the leave. (Apparently the medical leave was not properly communicated and insurance forms were not completed giving rise to misunderstanding.) The employee was laid off. Litigation was commenced for wrongful dismissal. During the course of the litigation, the former employer made several offers of re-employment. At trial, the judge ruled that the employee had failed to mitigate her damages when she refused to accept the re-employment. The employee appealed.
Fortunately, for the employee, the Court of Appeal allowed the appeal on two grounds. First, none of the re-employment offers had contained payment for lost wages during the lay-off period. As such, accepting the offer would have put the former employee in the position of having to work with an employer who she was suing. Second, the Court of Appeal ruled that the trial judge had failed to consider the intangible aspects of the employment relationship, specifically the element of trust that exists between the employer and employee. It stated:
...I am of the view that the trial judge was clearly wrong in failing to reflect the mutuality of trust, in the context of this employment, inherent in the relationship between employer and employee. The pertinent question when mitigation is in issue was described by Justice Bastarache as whether “a reasonable person in the employee’s position would have accepted the employer’s offer”. To determine whether this is so, in my view requires a judge to consider the full nature of the employment relationship. This includes the obligations of good faith or fidelity on the part of both the employer and employee, consistent with the nature of the work and the workplace. Most frequently questions of good faith, fidelity and fair dealing are questions that arise in the context of allegations of cause for the employee’s dismissal. The integrity of the employment relationship goes further, however. Just as trust of an employee, in the circumstances of the employment, is an important aspect for the employer, so too trust of the employer is important. (para. 29)
The court ruled that a breakdown of trust had occurred as evidenced by the employer surreptitiously recording conversations with the employee and also discussing the employee's employment with another employee. Those elements were crucial to determining that trust had broken down and that a reasonable person would not accept the offers of re-employment.
The Lesson for Employees: First, if planning to take a medical leave, make sure it is clearly communicated to your employee and that all relevant paperwork is completed. In this case, the breakdown of relationship likely could have been avoided had the employee ensured that her employer knew of the medical leave. Second, make sure you fully understand any offers of re-employment before rejecting them. Specific concerns may be resolved through negotiation.
The Lesson for Employers: If you are planning to re-employ the employee, do not burn the bridge of trust. Discussions with other employees or third parties could embarrass the employee and allow for him or her to reject the employment. Continue to treat the employee with respect. Additionally, take steps to ensure that offers of re-employment are complete and deal with settlement of any ongoing litigation.
Frederickson v Newtech Dental Laboratory Inc., 2015 BCCA 357 https://www.canlii.org/en/bc/bcca/doc/2015/2015bcca357/2015bcca357.pdf
The content and the opinions expressed here is informational purposes only and does not constitute legal or professional advice. Nor does reading or commenting on it create a lawyer/client relationship with the author. I encourage you to contact me directly at adrianlawoffice@gmail.com if you have specific legal questions or concerns.
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