Former manager not obligated to take demotion to mitigate damages

Employee with 26 years on the job fired after he refused to take old job back

Malloy v. Vipond Inc., 2005 CarswellNB 202, 2005 NBQB 149 (N.B. Q.B.)

The New Brunswick Court of Queen’s Bench ruled that a service manager wasn’t obligated to take his pre-managerial job back as part of a duty to mitigate his damages.

Gerald Malloy joined Vipond Inc. out of high school in 1980. He was certified as a licenced sprinkler system installer in 1986 and moved to Moncton, N.B., to work out of the Atlantic district office there.

In 1998 the company decided the office required a service manager and Malloy was appointed to the position. The service department did not produce as expected. In August, 2003 Malloy was told his position had been eliminated, that he was a valued employee and the company wanted him to go back to what he’d done before.

Malloy had worked for the company for 26 years, rising through the ranks to a position as supervisor. He saw the latest development as a step backward and refused the alternate job. He was terminated and filed an action.

The court ruled Vipond had made a unilateral and fundamental change to Malloy’s employment contract without providing reasonable notice of that change. This was constructive dismissal without cause and thus Malloy was entitled to damages.

Malloy had a duty to mitigate, but he had waited about a month before contacting prospective employers. Malloy said he attended to personal business and prepared a resumé during that time, that he was upset at the manner in which he had been dismissed and he was under some stress at having to contact employers with whom he had formerly been in competition. The court found the elapsed time before Malloy made serious efforts to get another job “entirely reasonable.”

The court called the second question — whether Malloy’s refusal to accept the alternative job offered by the employer who dismissed him was a failure to mitigate — “a difficult call.” There was no acrimony or hostility to Malloy on the part of the company. There was no evidence he would be humiliated should he rejoin the union. Financially he would earn as much, if not more, from the alternative employment. And personal pride is not a factor to be considered by the court in assessing if someone’s refusal to accept alternative work is reasonable.

Ultimately the court said Malloy’s continued employment with Vipond would have placed his interests in such jeopardy as to justify his refusing the job. The alternative work was fundamentally different and a clear shift from a management role to unionized field work. In addition, Malloy saw his worth to Vipond diminished and that made it difficult to continue his relationship with the company, it said.

As well, the alternative employment involved considerable out-of-town travel, something that would not help him in finding another job. Malloy had marketable skills that would have enabled him to find another job. Requiring him to remain with Vipond could well have been counterproductive to his attempts at full mitigation.

He was awarded $12,694 in damages, plus interest and costs.

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