eCaseNote 2008 No. 01

Money for Nothing? Confirming the Employee’s Duty to Mitigate

Evans v. Teamsters Local Union No. 31, 2008 SCC 20

In its May 1, 2008 judgment, the Supreme Court of Canada affirmed that dismissed employees are not necessarily free to receive the benefits of a notice period after declining continued employment with the employer. The significance of this case lies in the Court’s confirmation of the employee’s duty to mitigate when offered work after receiving notice of dismissal. We believe a brief review of this case and its implications would be beneficial to our clients.

This case involves Donald Evans, a business agent who was employed by the Teamsters Union for over twentythree years. Mr. Evans was dismissed without cause in early 2003 by the incoming president. They agreed that twenty-four months would be an acceptable notice period. However, Mr. Evans wanted it to be served out by twelve months of continued employment followed by a payment of twelve months of salary in lieu of notice. The employer insisted that Mr. Evans work for the full balance of the notice period, and, if this offer was not accepted by Mr. Evans, this would constitute just cause for termination and he would be considered to have failed to mitigate his losses.

In what might be a surprising decision to many, the Supreme Court sided with the employer. Rejecting the trial judge’s judgment for applying what was deemed to be a purely subjective test, the Supreme Court was of the view that the central issue is whether a reasonable person would accept such an opportunity. Embedded in this objective standard is the need to evaluate the non-tangible and tangible elements of each circumstance.

As a result, the Court held it appropriate to assume, in the absence of conditions rendering the return to work objectively unreasonable, that employees should be expected to mitigate their losses by returning to work for the dismissing employer if asked to do so. As one would expect, an employee is not obliged to accept an offer to work if the environment would be one of hostility, embarrassment or humiliation. However, in this case there was no evidence of acrimony between Mr. Evans and the employer, nor was there any evidence that Mr. Evans would be unable to perform his duties in the future. Determining that there was no serious damage to the ongoing employment relationship, the Court held that it was not objectively unreasonable for Mr. Evans to return to work in an effort to mitigate his damages.

Employers should glean several important messages from the Supreme Court in this ruling. The most notable is the notion that, where an employee will not be subjected to hostility, embarrassment or humiliation, they may be required to accept an offer by the employer to work for the balance of the notice period. An employee who fails to accept continued employment that a reasonable person would have accepted can be found to have not satisfied the duty to mitigate their losses.

The principle that damages in wrongful dismissal cases are compensatory rather than punitive is reinforced by this judgment. As such, any damage award will be impacted by the efforts of employees to mitigate their loss and the result of such efforts. Workers will not be given a free ride if it is proven that returning to their employer would not be an unreasonable proposition.

On the other hand, the Supreme Court also held that if an employer acts in bad faith when dismissing an employee, the damages awarded will never be subject to mitigation.

This decision confirms that employers do have flexibility when dealing with working notices. However, proper regard must still be had to the reasonableness of requiring an employee to return to work. Each case will turn on its own facts and employers should take proper steps to ensure that they understand the nature of the employment relationship before making any decisions regarding dismissal and working notice. Should you wish to receive a full copy of this decision or discuss its implications, please feel free to contact our office at your convenience.

The comments contained in this eCaseNote provide general information only and should not be construed as legal advice or opinion. For more information or specific advice on matters of interest, please call our offices at (709) 579-2081.