Wins Wrongful Dismissal: But Fails to Mitigate

In another blow to dismissed employees. a B.C. court has reduced the wrongful dismissal damages that would have been owing to an employee after the employee failed to return to work when “recalled.”  This follows a number of decisions across Canada including cases in Ontario, B.C. and even at the Supreme Court.  It has become quite clear that if an employee refuses to return to work when asked to return, even after being wrongfully dismissed, it may be very risky for the employee to refuse.

In the case of Hooge v. Gillwood Remanufacturing Inc., the plaintiff was a 36 year employee, working as a production supervisor at the time of dismissal.  He was put on a “lay off” by his employer without any advance notice or pay.  The defendant company claimed that it had the right to “lay off” the employee under the B.C. Employment Standards Act.  The plaintiff alleged that he had been dismissed and sued for wrongful dismissal.  One week after he filed his lawsuit, the employer purported to “recall” him back to work.

At trial, the B.C. Supreme Court held that the employee had in fact been constructively dismissed. The plaintiff had not had a written employment contract in place.  When he was put on a lay off, he was told that it was “indefinite” and that there were no plans to recall him.  He was given an ROE that said “shortage of work.”  The B.C. court agreed with the plaintiff that there was no term of his employment that would have permitted a “lay off” without pay after all of these years of employment.  He was, in fact, constructively dismissed and was entitled to eighteen months’ compensation.

However, the Court proceeded to look at the issue of mitigation.  “The law is clear that in certain circumstances an employee who declines an offer of re-employment from the same employer after having been dismissed, whether actually or constructively, may be found to failed to mitigate his damages, and have any award reduced on account of such failure to mitigate.”  As long as it would have been “reasonable” in all of the circumstances for the plaintiff to return to work, he or she may be obligated to do so.  The court discussed Evans. v. Teamsters Local Union No. 31  as well as other B.C. cases including Davies v. Fraser Collection Services Ltd. 2008 B.C.S.C. 942 and Besse v. Dr. A.S. Machner Inc. 2009 BCSC 1216.

Ultimately, the court concluded that the evidence did not establish acrimony, mistreatment, belittling, embarrassing actions or undermining of authority in the workplace.  The court concluded that the plaintiff should have returned to the same position, on the same terms and conditions, at the same rate of pay.  Here is the court’s reasoning:

“It seems to me that an employer who has laid-off an employee, or wrongfully terminated an employee without due notice, may very well come to the conclusion, particularly with the benefit of legal advice that its actions constituted a wrongful dismissal and may seek to mitigate its own exposure to the payment of damages by offering to re-hire the employee.”

Here, the court held that the plaintiff should have returned to work.

Fortunately, in this case, all was not lost for the plaintiff.  The defendant locked out its unionized employees and ceased operations approximately seven months after purporting to recall the plaintiff.  The court held that the plaintiff would not have been paid during the lock-out, so he would not have been able to mitigate his damages during that time period.  Nevertheless, he was docked 7 1/2 months’ pay for the time period during which he would have been able to work if he had returned to work when recalled.

This case, from a B.C. perspective, reinforces the interpretation of Evans that has become the law across Canada.  Employees who are fired, laid-off or otherwise dismissed – and then offered a return to work – even after they file a lawsuit, must be very careful in deciding how to answer the employer’s offer.  Refusing to return to work and then continuing a lawsuit can be very costly.

There is something to be said for the notion that employers might have made a mistake and should be entitled to reverse a decision and have an employee come back to work.  After all, in the unionized context, an employee can be reinstated.

However, more often than not, this type of case will simply be used by a range of employers looking to play games.  Employers can try to “lay off” employees without offering anything.  Then, if the employee sues, they can “recall” the employee.  This gives employers a way to try firing someone while minimizing the risk of owing any severance.  It seems to open up the door to all kinds of abuses by the types of employers that might choose to act unethically.  Certainly, there are situations in which employers may have a good faith “change of heart” or are otherwise justified in changing their minds and reversing a decision to dismiss an employee.

But that does not necessarily seem to be the case in many of the situations I see.  This line of case law creates uncertainty, economic and emotional stress for employees, and also makes it difficult to settle some cases reasonably, both from an employee and employer perspective.  Nevertheless, employees who ignore these decisions may be making a very costly mistake.

 

 

Dismissed Employees Must Return To Work if Recalled

Last year, the Ontario Superior Court held that a wrongfully dismissed employee may be required to go back to work if recalled by his or her employer.  I discussed that case here.

This past week, the Ontario Court of Appeal upheld the trial court decision and dismissed the appeal in Chevalier v. Active Tire & Auto Centre.

The Ontario Court of Appeal acknowledged that the plaintiff had been wrongfully dismissed when he was improperly put on a “lay-off.”  The  lay off came about after the employer tried to performance manage the employee before it put him on lay-off.

The plaintiff sued right away for constructive dismissal after being put on lay off.   Right after he began his lawsuit, the employer recalled him to work.  He refused to return and took the case to trial, arguing that the workplace had become “poisoned.”

However, at trial, the Ontario Superior Court held that there was no “demeaning, objectionable or retributory conduct” by the employer and that the constructively dismissed employee should have returned to work.

The Ontario Court of Appeal has upheld this decision.  In doing so, it has reinforced the idea that when an employer tries to implement a performance improvement plan, this will not necessarily create a poisoned work atmosphere.  But more importantly, the Court of Appeal has reinforced the Supreme Court of Canada jurisprudence in Evans v. Teamsters Local Union 31 which states that wrongfully dismissed employees may be required to return to work if recalled by their employers.  This can apply even after the employee files a lawsuit.  Failing to return to work can lead to a finding of “failure to mitigate damages.”  The dismissed employee can lose the case completely in these circumstances.

Dismissed employees who are recalled to work will need to consider the recall notice very carefully.  Continuing on with a lawsuit after an employer purports to call the employee back to work can be risky and ultimately, very costly.

 

 

Is A “Layoff” Really A Wrongful Dismissal?

Some employment lawyers and HR professionals have been buzzing about a recent decision of the Ontario Superior Court which looked at the issue of whether a layoff could be a wrongful dismissal.  Some management lawyers have claimed that the case, Trites v. Renin Corp. is a “game changer” which makes it possible for employers to layoff most employees instead of dismissing them outright.  Even though the case is apparently not being appealed, its significance is probably being overrated.

The plaintiff, Sandra Trites, was a Division Controller for the defendant Renin Corporation.  She had been with the company for more than 6 years.    The defendant was undergoing financial difficulties.  It gave more than 50 employees lay off notices with varying recall dates.  In Trites’ case, it gave her a notice recalling her to work some seven and a half months after the start of her “layoff.”   Renin was asked to sign a consent agreeing to her “layoff” status in return for which Renin indicated that it would continue certain of her employment benefits.

The main argument was over whether an employee could claim that she was constructively dismissed if she was put on a layoff as contemplated in the Employment Standards Act, 2000 (“ESA”).  The judge wrote ” [i]n my view, there is no room remaining at law for a common law claim for a finding of constructive dismissal in circumstances where a temporary layoff has been rolled out in accordance with the terms of the Act.”  However, here the Court held that Renin had not put Trites on a proper layoff.  It had not continued her benefits or otherwise complied with the Act.  Trites was awarded wrongful dismissal damages of 33 weeks’ pay, which was equivalent to the time she was out of work.

It does not seem that there would have been any significant reason for Ms Trites to appeal the decision since she was awarded damages that apparently compensated her for the time she was out of work.  From the perspective of a judicial precedent, the case is ultimately an example of an employer being ordered to pay an employee wrongful dismissal damages after trying to play around with layoff rules unsuccessfully.

Employers who wish to ensure that there is no doubt about their ability to rely on the ESA lay off provisions can include clauses in their employment agreements stating the employer has the right to lay the employee off provided that it complies with the ESA.  If an employer uses this language and then puts employees on a proper lay off, there will be little that the employees can do until the lay off period expires.

F’or employees, if they are working in a workplace situation that does not seem to contemplate a “lay-off” as a term of employment, but the employees are placed on a lay-off anyways, they may still be able to claim constructive and/or wrongful dismissal.

Like the situation before the Trites v. Renin Corp. decision, these cases will often depend on the facts of the particular case including the type of workplace, the work history and whether the employer, in purporting to lay off employees, complies meticulously with the requirements of the ESA.  Many, like Renin Corp., do not.

 

 

google-site-verification: googlec03888379d3701bb.html