Constructive Dismissal cases are risky and contentious and often make their way through the court system.  A recent decision of the Ontario Court of Appeal will greatly assist many employees, who are concerned about whether they are required to stay with their employers in unsatisfactory roles to “mitigate their damages” after being constructively dismissed.

The decision in Adrian Chandran v. National Bank of Canada helps clarify these issues.  The Ontario Court of Appeal has ruled that where the workplace might be perceived as humiliating or embarrassing, employees are not required to remain with the employer to mitigate their damages after being demoted.

Mr. Chandran was a senior manager at the National Bank for 18 years.  He was a supervisor with 11 reports.  The Bank decided to conduct a survey of employees about Mr. Chandran.  From comments in the survey, it concluded that Chandran’s behaviour was, at times, condescending, embarrassing and bullying.  The Bank accepted these allegations and told Mr. Chandran that it was removing all of his supervisory responsibilities.  It proposed two alternate positions, at a similar rate of pay and level, but without the supervisory role.  Mr. Chandran did not accept either of these positions and instead sued for constructive dismissal, arguing that he had been demoted.

From a Canadian legal perspective, the Bank should have conducted a better investigation and then warned Chandran if it came to the conclusion that there had been misconduct.  It should have taken steps to address the concerns that had been raised.  Removing Chandran’s supervisory responsibilities was not an acceptable response by the Bank was viewed as a demotion, triggering a claim for constructive dismissal.

At trial, Mr. Chandran was successful.  He was awarded 14 months’ pay, totalling more than $130,000 along with legal costs of more than $65,000.

The National Bank appealed to the Ontario Court of Appeal.  It argued that even though Mr. Chandran may have been constructively dismissed, he was still required to accept one of the positions offered by the Bank and to continue working as a way of mitigating his damages.  The Bank based its argument on the Supreme Court of Canada’s decision in Evans v. Teamsters Local 31 (2008), a case in which the Supreme Court had held that employees may be required to return to work to mitigate their damages, even after they have actually been dismissed.

The Court of Appeal roundly rejected this argument.  It held that Mr. Chandran was not required to remain with the Bank.  Serious misconduct had been found and serious discipline had been imposed on Mr. Chandran.  The atmosphere would have been embarrassing and humiliating.  It upheld the full award from the trial court and added a further costs award of more than $20,000.

This decision will help to limit the Supreme Court’s bizarre ruling in Evans.  Employees who intend to bring forward a constructive dismissal claim will still need to demonstrate that it would be “embarrassing and humiliating” to remain with an employer after being constructively dismissed.  That is not always easy or straightforward and can be quite risky.  But the Chandran v. National Bank of Canada case will make it more difficult for employers to simply rely on mitigation arguments when they constructively dismiss employees.

For employees, despite the positive result obtained by Mr. Chandran, constructive dismissal cases are still extremely risky.  Employees need to ensure that they obtain proper advice before making their final decision about whether and when to leave the workplace.  They need to ensure that they manoeuvre themselves into the best possible position by carefully exploring and clarifying the employer’s position.   If this is handled properly, at least some of the risk can be minimized.