On appeal, the court, apart from the mitigation issue, interestingly doubted the correctness of the finding of constructive dismissal. The reasoning was not based on the conclusion of a demotion, but rather on the argument that implicitly accompanying a promotion was an implied probationary term that the employer may return the employee with impunity back to the former position, given dissatisfaction with the performance.
Implying probationary terms to an appointment would be a fresh judicial step. The time to set out the terms of a promotion is surely when they are offered to the employee. The Ontario Divisional Court in 1986 1 had previously held that the imposition of a probationary term by the employer unilaterally was grounds for constructive dismissal. The same conclusion followed in the Nova Scotia Supreme Court which contains an excellent review of prior cases on this point. 3
The court in Mifsud continued to state given the finding of constructive dismissal, “it must be taken from this that he 4 implicitly rejected an implied term that MacMillan could demote Mr. Mifsud for what it considered to be inadequate performance”.
These words are difficult to comprehend. This issue was not argued before the trial judge. The trial judge did not address this issue. The court appears to be suggesting that an employer would have the implied right to demote based on its own view of inadequate work performance, not just cause, where the salary is the same. This is all before the mitigation issue is discussed.
Clearly the court had an issue on the constructive dismissal finding, which was neither accepted nor rejected: “It is not necessary in this case to reject the trial judge’s finding of constructive dismissal nor to consider the issue of just cause” due to the mitigation finding. It would have been preferable that the court had chosen to set aside the constructive dismissal finding, which would the expected sequential logical analysis.
Nonetheless the court determined that Mifsud should have accepted the alternative position as a mitigation obligation: 5
The fact that the transfer to a new position may constitute in law a constructive dismissal does not eliminate the obligation of the employee to look at the new position offered and evaluate it as a means of mitigating damages. In all cases, comparison should be made to the contractual entitlement of the employer to give reasonable notice and leave the employee in his current position while a search is made for alternative employment. Where the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships involved are not acrimonious (as in this case) it is reasonable to expect the employee to accept the position offered in mitigation of damages during a reasonable notice period, or until he finds acceptable employment elsewhere.
The court did send this life raft out to those in need:
It must be kept in mind, of course, that there are many situations where the facts would substantiate a constructive dismissal but where it would be patently unreasonable to expect an employee to accept continuing employment with the same employer in mitigation of his damages.