Manitoba worker rejected offer of same position from successor employer
The Manitoba Court of Appeal has dismissed a worker’s appeal of a court finding that he was constructively dismissed but his failure to accept a position with the company that acquired his employer removed his entitlement to 24 months’ pay in lieu of notice.
The worker was a former employee of GE Transportation, a division of General Electric Company, who had founded a rail industry electronics firm that was acquired by GE Transportation in 2016. With the acquisition, the worker became an employee of GE Transportation through multiple agreements, including an employment agreement, a retention bonus agreement (RBA) – which entitled him to a $300,000 bonus if he remained employed full-time for five years - and a restrictive covenant agreement (RCA).
In early 2019, the parent General Electric Company announced plans to sell GE Transportation to Wabtec Corporation, a US company. The worker was worried that joining Wabtec would breach the RCA and jeopardize his bonus, because if he accepted Wabtec’s offer of employment he would be voluntarily leaving GE Transportation. Despite reassurances that Wabtec would honour the RBA and GE Transportation would transfer it to Wabtec in the sale agreement, the worker rejected Wabtec’s offer.
As a result, when the sale of GE Transportation became final on Feb. 25, the worker didn’t join Wabtec. He filed a wrongful dismissal claim, alleging that GE Transportation dismissed him without reasonable notice and claiming his pro-rated retention bonus and a performance bonus for 2018.
Constructive dismissal
The trial court found that the worker was constructively dismissed but had failed to mitigate his damages by refusing the comparable employment offer from Wabtec. Although the court determined that the worker’s reasonable notice entitlement was 24 months, the worker’s failure to mitigate by accepting Wabtec’s job offer cancelled it out. The worker’s damages were limited to the pro-rated portion of the retention bonus, which was $133,000.
The worker appealed the decision.
The Court of Appeal upheld the trial court’s interpretation of the contractual documents, agreeing that the RBA and RCA were distinct agreements. The appeal court rejected the worker’s argument that the retention bonus could not be transferred to Wabtec, finding nothing in either agreement that indicating that GE Transportation couldn’t assign it to Wabtec in a binding agreement.
The appeal court also found that Wabtec's offer of employment was “not only comparable, but practically identical” to the worker’s existing employment, and that the terms of the RBA remained enforceable under the new employer.
Failure to mitigate
The court also found that the worker’s refusal to accept the new position with Wabtec was based on an unreasonable interpretation of his contractual obligations. The timing of the job offer, which came before the formal termination date, wasn’t determinative, said the appeal court, noting evidence that Wabtec would have re-extended the offer if the worker indicated that he was interested.
“There is a complete absence of evidence of any material changes to the terms of employment, conditions rendering continuing employment with the successor employer unreasonable, or any evidence of acrimony, humiliation or loss of dignity,” said the Court of Appeal in finding no palpable or overriding error in the trial court’s decision. The appeal was dismissed.
