Constructive Dismissal

Impact of Evans

The fundamental precept of Evans is whether a reasonable person would accept the offer extended by the employer to mitigate the damage claim encountered due to termination of employment, direct or otherwise. This refers to the offer to remain employed for the notice period. The principles expressed in Evans apply to both a direct and constructive termination. The obligation to remain employed to mitigate, as in Mifsud, will engage the same excepting factors as discussed in Evans. The cases which follow Evans examining the reasons expressed for refusing to remain employed in the notice period apply also to the mitigation issue in a constructive dismissal setting.

The Supreme Court did note that an employee would not be expected to continue working in an atmosphere of hostility, embarrassment or humiliation. Hence, non-tangible elements must be weighed in addition to the terms and conditions of such continued employment.

In Evans, the Supreme Court of Canada held that a reasonable person should be expected to take available employment where the salary offered is the same, where working conditions are not substantially different, and where there are no acrimonious relations.

Objective View

The standard to be used is an objective one. It is a question that must be answered considering both tangible elements such as the salary, working conditions and the like and non-tangible elements including work atmosphere, stigma and loss of dignity.  It must therefore be a contextual analysis based on a number of factors. 1

In Evans, the Yukon Court of Appeal reversed the trial judge on this issue. It was determined that the trial judge had overlooked relevant evidence and applied a subjective rather than an objective test.  The evidence did not support the conclusion that the circumstances, viewed objectively, allowed Evans to refuse to resume employment with the union.

In an Ontario Court of Appeal decision, in March of 2014, the court concluded that the trial judge correctly noted that an employee cannot be obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation: 2

She noted, again correctly, that she was obliged to assess, objectively, the “work atmosphere, stigma and loss of dignity” to be faced by Mr. Farwell in considering whether to continue his employment in an effort to mitigate his damages.

This view was repeated in a 2017 decision of the same court. 3

Compensation

Compensation which is “significantly lower” will suffice to decline the offer. 4

 The New Brunswick QB found no mitigation obligation, given the salary differential of 20%, the lack of benefits for three months and the probationary term. The trial judge also found that there would have been a loss of prestige but not to the point of humiliation. 5

Notwithstanding the words in Evans which stated that the salary should be the same, one case allowed the successful plea of mitigation when the salary offered was reduced from $35 per hour to $28. The job offered was also one of lesser responsibility. The plaintiff had been Lead Hand and was offered the position of tool maker. 6 This does seem at odds with the ratio of Evans. The case has not been distinguished nor confirmed in subsequent cases on this point.

Concrete Terms

The offer made by the company must be “concrete..with well-defined terms” particularly concerning compensation. 7

An offer which is equivocal with respect to such terms of employment, including the nature of the duties, including the determination of the person to whom the employee will report, or remuneration, will not meet this test. Such an offer will be seen as “guarded and ambivalent”. 8

This concept was applied by Gans, J. of the Ontario Superior Court and approved by the Court of Appeal:

In this case, the trial judge found that there were too many variables concerning the tangible aspects of the revised role that were essentially left to the department head and CEO, and that in these circumstances the offer of alternative employment was “more form than substance.” It was not objectively reasonable to conclude that the offer should be accepted. Moreover, the trial judge found that non-tangible elements provided additional support for his conclusion. He found, in particular, that the move to the revised position “would have been devastating” for the appellant on several levels.

Release

In May of 2012, the New Brunswick Court of Appeal considered and dismissed in AMEC Americas v MacWilliams, the employer’s argument that a settlement offer which allowed the plaintiff to return to work fit within the mitigation obligation as set out in Evans. The position met without success for three reasons, one of which was that the offer required a full release, secondly it fell short of the notice period set by the court and thirdly, it contained uncertainties.

Efficient Breach

The concept that an employee must mitigate by remaining employed through the notice period has been determined to be an “efficient breach”. 9 The Ontario Court of Appeal stated that courts should encourage such conduct and that ”In proper circumstances, the principle of efficient breach can apply to employment contracts". 10

Timing

The employer must offer the opportunity to remain employed through the notice period after the plaintiff had refused to accept the offered position which had led to his assertion that he had been constructively dismissed. 11

Entire Notice Period

The offer should be one to work through the notice period. The motion judge concluded that the new offer of employment did not suffice. It was not an offer to work through the notice period. Instead, it was simply an offer for a new full time position at much less compensation. 12

Side Hustle

In a 2011 decision of the BC Court of Appeal, 13 the fundamental issue was, as found by the trial judge found, “probable loss of the [plaintiff’s] ability to carry on the sideline business of buying, storing, repairing and selling vehicles”.

The case hinged upon the finding that the side business was not an employment term. Hence the offered opportunity need not have duplicated this term. The plaintiff's case failed.

Appellate Review

The Ontario Court of Appeal agreed with the finding made by the trial judge that the plaintiff had no obligation to accept the demotion as offered. The plaintiff had been offered a position reporting to a young man whom she had trained. The employer was found to have been “downright insulting to Ms. Brake and her personality and abilities. The court also noted that the finding made by the trial judge was one of mixed fact and law and was reviewable only if there was a palpable and overriding error. 14