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Constructively Dismissed Employees still Required to Mitigate

Since the Supreme Court’s decision in Evans v. Teamsters Local Union Local No. 31, the law of constructive dismissal in Canada has, in most cases, required that dismissed employees mitigate their damages by accepting (continued) employment with their employers.  However, also since that decision, plaintiffs (and their lawyers) have been pushing back against this doctrine and trying to find ways around it.

However, a recent decision of the Ontario Superior Court reinforces that the only exception to this requirement to mitigate is where it would be unreasonable to do so because a return to work would oblige the employee to “work in an atmosphere of hostility, embarrassment or humiliation”.  In Chevalier v. Active Tire & Auto Centre Inc. the Court reviewed the plaintiff’s situation and determined that, despite the plaintiff’s assertions that management was trying to make his life miserable so he would quit, no such atmosphere existed even after he was constructively dismissed by an improper layoff.

Earl Chevalier had been employed for 32 years by Speedy Muffler, having spent some 17 years as a service station manager, when, in March, 2007, Active Tire took over the operation of the Niagara Falls service centre that was managed by Mr. Chevalier.  Active Tire’s sales targets were decidedly more aggressive and, when Chevalier had trouble meeting them, he took umbrage with the coaching and management he received to help him try to meet targets, finding it humiliating and harassing.  Chevalier was then transferred to the Welland station in November, 2007.

When the Welland station was franchised Chevalier resisted a transfer to Brampton and instead accepted a transfer to St. Catharines, had a brief stint in Toronto before ending up back at the Niagara Falls service centre in August, 2008.  During this time Chevalier felt increasingly mistreated, believing that management was trying to push him out; Active Tire, on the other hand, justified its actions as attempting to help Chevalier learn and implement its sales methods, although admitting that management was increasingly frustrated by his inability to do so.  When business at Chevalier’s centre deteriorated instead of improving in the fall of 2008, Active Tire laid him off.  When Chevalier promptly filed a wrongful dismissal action, Active Tire sought to recall him, stating they had been mistaken in their belief that they could lay him off; further correspondence from Active tire’s lawyer confirmed the company’s desire to continue his employment and apologized for its mistake.

Chevalier refused to return and proceeded with his wrongful dismissal action, ultimately being unemployed for 17 months before finding an equivalent position.  Active Tire did not contest that Chevalier had been constructively dismissed, but relied on its offer of re-employment for the proposition that Chevalier’s failure to mitigate his losses should result in the dismissal of the action.

Justice Lococo accepted Active Tire’s argument, determining that a reasonable person would have returned to work as per the re-employment offer.  He also found that, although the sales program was aggressive and Chevalier may never have been able to meet it, it was a term of his employment and the company was justified in attempting to assist him in meeting targets.  As a result, Justice Lococo dismissed Chevalier’s argument that Active Tire was trying to “drive him from the company”: he “…was not treated to demeaning or humiliating conduct that would justify his refusing to return to Active Tire.”

This decision is in line with Evans and maintains the employer’s “buffer” against constructive dismissal claims when making changes to an employee’s terms and conditions of employment.  However, it is always important to review all the circumstances of employment before implementing significant change, and the CCP team can provide valuable legal and strategic advice in that regard.

Please Note: This blog has been prepared as an informational service for our clients and other interested parties. It is not intended to constitute legal advice, a complete statement of the law or opinion on any subject. Although we endeavour to ensure the accuracy of the content, no one should act upon the information provided without a thorough examination of the law after the facts of a specific situation are fully considered.



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