Mitigation: Offer of Employment after Termination: Evans: Chronology is Important

The question of the chronology of an offer of alternate employment and the Evans submission has been raised in the cases which follow. Generally speaking, the offer of alternate employment to be of persuasive grade should ideally be extended following the termination event.

The one decision which declined the need for the offer to be extended following termination offered a distinction based on the fact that the offer was made from an intended buying company and not the same employer. This should logically not lead to a contrary decision. Indeed, other cases in the same context did not view this factor to be decisive.

The cases explore this issue.

A 2014 Ontario Court of Appeal decision considered the question of the timing of the offer of alternate employment from the same employer in the context of an Evans argument. The trial judge had found that there was no obligation on the employee to accept the offered position as it represented a demotion in responsibilities similar to a position previously held by him and hence met the exception of “embarrassing and humiliating”. ^{1 4} This case involved an asset sale of the employer company. The buying company had made three offers to the plaintiff, all of which were prior to termination. The trial judge had found that the last offer was one which was comparable in terms of responsibilities and was one which ought to have been accepted. The damage claim failed for this reason. The plaintiff argued that, consistent with the above decision, this offer should be ignored.

The Farwell case was distinguished as the offer in that case was from an “existing” employer. ⁵ While this is so, that the offer was made by the buying company, there is little logic in this marking a distinctive difference. The Dussault case was not followed on the basis that the buying company had mandated a release be provided in favour of the vending employer.

This issue was once again raised in a 2023 Ontario case. ⁶ The plaintiff was a warehouse worker with some 13 years of service. The case also involved an offer made by an acquiring company prior to termination, a fact which was decisive in this instance. The initial offer made by the buyer was for employment “at will”. No benefits were included. Regardless of these facts, the trial judge found that “the duty to mitigate was not engaged by this offer because it was made and withdrawn before the plaintiff’s actual termination”. By the time of the plaintiff’s termination, the position offered to the plaintiff had been filled and not capable of acceptance.

The fact that the offer had been since withdrawn and one not available on termination did appear to be influential.

It is to be noted that the chronology of events does appear to be critical with respect to the argument that the statutory payments in Ontario are due on termination. The Ontario regulation allows a defence but mandates the sequence of events to be an offer of other reasonable employment followed by termination, as reviewed here.

In the required chronology for an effective Evans defence, the termination must be followed by the offer to remain employed for the notice period. This is the opposite of the regulation’s mandated sequence of events.

Hence, the plaintiff, facing an Evans offer of continued employment, may legitimately request the ESA sum be paid. Should litigation ensue, the plaintiff will be entitled to claim this amount. They may also argue that the failure to make good on the ESA sum is reflective of bad faith conduct, allowing the employee to decline the offer of continuing employment for the notice period. There is no case law on this subject.

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1. trial decision
4. Farwell v Citair OCA [/efn_ note].

   On appeal, the employer/appellant had argued that the trial judge had not applied the Evans test properly. To this issue, the Court of Appeal determined that while this argument made on appeal did raise an issue worthy of argument, the fact that the offer of alternative employment had been extended prior to termination and not following, sealed the defendant’s fate:

   There may well be merit in the appellant’s argument that the trial judge took a subjective approach in assessing “work atmosphere, stigma and loss of dignity” for the purposes of mitigation, rather than the required objective approach. There may also be merit in the argument that the circumstances here would support the imposition of an obligation on Mr. Farwell to mitigate by working through the notice period. But the appellant faces another obstacle, which, in my view, is insurmountable. To paraphrase Evans, the appellant’s mitigation argument presupposes that the employer has offered the employee a chance to mitigate damages by returning to work. To trigger this form of mitigation duty, the appellant was therefore obliged to offer Mr. Farwell the clear opportunity to work out the notice period after he refused to accept the position of Purchasing Manager and told the Appellant that he was treating the reorganization as constructive and wrongful dismissal.

   [21]      There is no evidence that the appellant extended such an offer to Mr. Farwell. Accordingly, Mr. Farwell did not breach his mitigation obligation by not returning to work.

   This does appear to be a technical approach to the substantive issue.

   The decision on this issue of timing was followed in a 2018 Ontario decision. ² Dussault v Imperial Oil; upheld in OCA [/efn_ note] The question of timing in this case was, however, one factor of many which led to the finding that there was no failure to mitigate. This was an offer made by the buying company and not the employer.

   The other factors of influence were the requirement to sign a release in favour of their employer, the failure of the buyer to recognize past service, the fact that the two plaintiffs were paid more than similar employees in the buying company and were expected to hide this fact from their co-workers. In addition, the employer had agreed to provide a lump sum to compensate for lesser benefits but never did disclose the amount. The issue of note is that the timing question was not the conclusively determining factor.

   This same issue was raised again in 2020 in a further Ontario decision. ³ Hickey v Christie & Walther Communications

5. The italics were used in this manner in the decision
6. Giduturi v LG Electronics Canada