The duty to mitigate: working for my former boss!

Date: 2009
Author: Daniel A. Lublin
Publication: Metro

Can’t just pack up and leave

Opportunity is missed by most people because it is dressed in overalls and looks like work. – Thomas A. Edison.

How do you beat your ex-employer in court but ultimately collect little or no damages? Just ask Michael Davies. He succeeded in proving that he was constructively dismissed but failed to show that he acted reasonably by choosing not to return to the workplace that fired him. In the ever-changing world of employment law, returning after you have been fired may sometimes be required!
When Richmond B.C. based Fraser Collection Services Limited experienced a slowdown in work, Davies, a 63 year-old Debt Collector, was approached by Fraser’s President and told that he would be placed on a temporary layoff. During Mr. Davies’ exit meeting, Davies was told that Fraser hoped to recall him back to work, on a long-term basis, as soon as the company regained financial stability and he was invited to remain in touch with the company during the layoff to discuss his potential to return to work.
Being placed on a temporary layoff did not sit well with Davies. Feeling that he had been “financially stranded” and “dumped”, he did not want to wait around for Fraser to pick and then choose when he could work. Approximately two months later, Davies was called back to work, but he ignored the offer and sued the company instead.
Davies sued for damages, alleging that his layoff amounted to a dismissal.  Relying on the legal doctrine of constructive dismissal, Davies was able to successfully argue that because his employment contract did not expressly or implicitly allow for temporary layoffs, he was in fact terminated and entitled to damages instead.
Now that Davies had obtained the right to damages stemming from dismissal, he had also inherited the duty to mitigate those damages. The obligation to mitigate requires dismissed employees to take reasonable steps to limit their losses. Usually, this requires ex-employees to look for other work.   If an employee doesn’t do so, a court may reduce the damages that were otherwise owed.
Until recently, it was generally proper for an employee to reject returning to the workplace that fired him. However, that all changed when the Supreme Court found that unless there are conditions such as humiliation, embarrassment or hostility, employees would be expected to return to their jobs. In this case, because he had refused Fraser’s offer, it was able to show that a comparable job was open for Davies to accept but that he had declined it.
Although Davies had made out his claim for wrongful dismissal, the court ultimately reduced his damages by 80% for refusing to return to work. Employees, therefore, can take the following lessons from this case:
  • Where an employer offers its former employees a bona fide chance to return to work, the employees may be required to accept, unless they can objectively show that there is an atmosphere of hostility, embarrassment or humiliation in returning.  Work with counsel to take steps to “build” that argument.
  • A temporary layoff can sometimes amount to a wrongful/constructive dismissal. However, it may not always be wise to sue for damages, even if you have the ability to do so.