Mitigation: Offer to Return to Work Following Termination: Evans: Statutory Obligations

The issue may arise as to whether an Evans fact situation may give rise to a claim for the ESA sum due on termination. This may be critical for several reasons discussed below.

An Evans defence, presuming no adverse conditions showing “embarrassing and humiliating” circumstances on the issue of continued employment for the notice period, requires the following chronology of events, in this order:

1. Termination:

2. Followed by an offer of continued employment for the notice period.

This particular chronology has been determined to be mandatory for a successful Evans defence. This is significant as this order of events is the opposite for the ESA payment.

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. ¹The 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”.

On appeal, the employer/appellant had argued that the trial judge had not applied the Evans test properly, having arguably applied a subjective analysis. To this issue, the Court of Appeal determined that while this submission 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: ²

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 decision on the importance of this chronology was also followed in a 2018 Ontario decision. 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. ³

From the above cases comes the conclusion that this sequence of events is critical.

Presuming a seemingly attractive Evans offer of continued employment, given a termination, which, in turn, has been followed by a subsequent offer of continued employment for the notice period, the submission will follow that the ESA sum is nonetheless due, given an unretracted termination.

ESA

There is a provision in the ESA regulation which denies the employee the right to the ESA termination and severance payments, given an offer of other reasonable alternative employment. The regulation, however, requires a different chronology.

O Reg 288/01 reads as follows:

Employees not entitled to notice of termination or termination pay

2. (1) The following employees are prescribed for the purposes of section 55 of the Act as employees who are not entitled to notice of termination or termination pay under Part XV of the Act:

……An employee whose employment is terminated after refusing an offer of reasonable alternative employment with the employer.

The Ontario regulation allows a defence but mandates the sequence of events to be an offer of other reasonable employment followed by termination. This is precisely the opposite sequence of events for an Evans defence.

Hence, the plaintiff, facing an Evans offer of continued employment, may legitimately request the ESA sum be paid. It is clear that there is no mitigation obligation nor an offset for mitigated income to allow for payment of the statutory sums. ⁴ 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.

Other jurisdictions in Canada do not have the equivalent of the severance pay requirements but each does have a minimum notice or payment in lieu provision.

The Alberta Employment Standards Code has a similar term which exempts the need to provide termination notice or pay when the employee has refused reasonable alternate employment. The sequence is again the same as the Ontario statute. ⁵

The B.C. statute does not impose such a sequence of events, but rather exempts the need to provide the statutory minimum where there has been an offer of reasonable alternative employment. ⁶ The law in P.E.I. is the same, ⁷ as is that of Nova Scotia, ⁸ Newfoundland & Labrador, ⁹ and the Yukon. ¹⁰

Manitoba law does not deal with this circumstance of an alternate offer of employment, ¹¹ as is the case with the Canada Labour Code. ¹²

The Saskatchewan Employment Act follows the Ontario chronology, ¹³ as does that of New Brunswick, ¹⁴ and that of the N.W.T. ¹⁵

There is no case law on this subject. That may change.

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1. trial decision;  Farwell v Citair OCA
2. highlighting added presently
3. Dussault v Imperial Oil trial; OCA
4. Brake v PJ-M2R OCA
5. Employment Standards Code, s. 55(2) d
6. Employment Standards Act, s. 65(1)f
7. s. 29(2)
8. S. 72(3)e
9. s. 53(1)e
10. s. 49(1) g
11. Manitoba Employment Standards Act, s. 62(1)
12. Regulations, s.30(1) and Canada Labour Code s. 230(1)
13. S. 2-63(e)
14. S. 31(2)
15. S. 37(2)