Digital Brain
digital brain
digital brain

Employees’ Duty to Mitigate: Comparable Employment Does Not Mean Any Employment

July 2019 Employment and Labour Relations Law Bulletin 2 minute read

The Ontario Court of Appeal has confirmed in a recent decision that an employee’s duty to mitigate following a without cause termination does not require the employee to accept a notably lesser position with the same employer.

In Dussault v. Imperial Oil Limited, the Court held that despite the general rule that an employee may be obligated to mitigate his or her loss by accepting a comparable position with the company, in order to be comparable, offers of employment must be offer comparable status, hours, and remuneration of the employee’s employment with his/her former employer. Put simply, comparable employment does not mean any employment.

Background

The two plaintiffs in Dussault were managers with Imperial Oil Limited (“Imperial”) for over 39 and 36 years respectively. Their remuneration included participating in a savings plan, whereby contributions were split between savings and a retirement income plan.

Following the sale of Imperial’s retail business to Mac’s Convenience Stores Inc. (“Mac’s”), the plaintiffs received employment offers with the following terms:

their base salaries (as with Imperial) would remain the same for a period of 18 months;
Mac’s would not recognize their years of service with Imperial; and,
Imperial would provide “lump-sum payments” to make up for the reduction in value of the benefit plans contingent on the acceptance of Mac’s offer, resignation from Imperial, and signing of a release in favour of Imperial.

Both plaintiffs rejected offers from Mac’s, alleged that they were wrongfully dismissed, and sought summary judgment. The motion judge held that the plaintiffs were reasonable in refusing the offers from Mac’s, notwithstanding their duty to mitigate. The motion judge emphasized Imperial’s demand that the plaintiffs sign a release in order to receive the lump-sum payment in lieu of lost benefit value and Imperial’s failure to recognize the plaintiffs’ past service. Overall, the motion judge found that the proposed positions with Mac’s were not sufficient comparable to the plaintiffs’ previous jobs, particularly in terms of salary and benefits, and awarded each 26 months’ notice.

Court of Appeal Decision

Imperial appealed, submitting that the motion judge erred in finding that the respondents had not mitigated their damages by accepting comparable employment with Mac’s.

The Court of Appeal dismissed Imperial’s appeal, finding that the offers from Mac’s were insufficient and that the plaintiffs / respondents acted reasonably in refusing them. The Court of Appeal emphasized that “comparable employment” does not mean “any employment”. In order to be “comparable”, offers of employment must be comprehensive of the status, hours, and remuneration of the employee’s employment with his/her former employer.

Key Takeaways

The Court of Appeal’s decision in Dussault highlights employers’ need to carefully craft offers to employees when attempting to mitigate the impact of a without cause termination, especially when making an offer after acquiring a business. Whether or not an employee’s decision to refuse an offer was reasonable is a fact-driven inquiry based on factors such as the timing of the offer (pre-termination vs post-termination) and the offer’s terms, especially remuneration. Employers, especially those involved in asset transactions, should seek advice as to how to draft offers of employment to the seller’s employees.

by Kyle Lambert and Shahnaz Dhanani, Summer Student

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2019

Insights (5 Posts)

Featured Insight

The 2022 Construction Labour “Open Period” – What Employers Need to Know

March 1 – April 30, 2022 is the “Open Period” for ICI collective agreements, and many non-ICI agreements, in Ontario. During this period members of construction unions can apply to the Ontario Labour Relations Board to terminate a union’s bargaining rights with their employer, or – more commonly – a rival union can apply to the Board to displace an existing union, in what is commonly known as a “raid”. During the Open Period employers will likely see increased union activity on sites as incumbent unions will seek to maintain member support, and as rival unions may try to gather support for a raid.

Join us on Wednesday, February 2nd for a discussion about what employers should expect and need to know if a decertification application or a displacement application involving their employees is filed at the Board.

Details
Wednesday, February 2, 2022
Featured Insight

PropTech: Property Technology, the New Frontier in Real Property, Part 3: Challenges

In this bulletin, we discuss the risks and challenges of using PropTech by businesses in the real estate space and for consumers of such products.

Read More
Jan 18, 2022
Featured Insight

Plan for the Ban: Our New Year’s Update of Single-Use Plastics Bans Across Canada

This bulletin provides an updated summary of the current state of single-use plastics legislation across Canada.

Read More
Jan 18, 2022
Featured Insight

Cash is King – Taking Control over Cash Collateral

In secured lending transactions, a debtor's cash may form part of the lender's general security or may be deposited with a financial institution to support certain contingent obligations (such as outstanding letter of credits)

Read More
Jan 18, 2022
Featured Insight

Alberta Securities Commission Provides Guidance On Shareholder Rights Plans, Break Fees and Use of Equity Swaps in Take-over Bid Context

An Alberta decision has held that the use of swaps in a hostile take-over bid can be abusive, and added guidance on shareholder rights plans and break fees.

Read More
Jan 12, 2022