Surprising Supreme Court decision gives employers remarkable power
When an employee is terminated, he has a duty to mitigate his damages by looking for another job. But what happens when the very employer that just showed him the door gives him the option to work out the notice period?
Most employees would likely reject such an idea, and many employers might not be jumping on that bandwagon either. But last month, the country’s top court upheld a ruling stating an employee in the Yukon had a responsibility to return to work with the employer that fired him in order to mitigate his damages. The fallout from the Supreme Court of Canada’s decision in Evans v. Teamsters Local Union No. 31 will have implications for wrongful dismissal and constructive dismissal cases for years to come.
Donald Evans was terminated after 23 years as a business agent with Teamsters Local 31 in Whitehorse following a bitterly fought election of a new executive he opposed. In the termination letter, dated Jan. 2, 2003, the union said it was prepared to discuss his severance package. Evans began corresponding through his lawyer in an effort to reach a settlement. Meanwhile, the union continued to pay his salary and benefits.
On May 23, 2003, the union said it couldn’t agree to his demands and asked him to return to work until Dec. 31, 2004 — the end of his 24-month notice period. Evans refused and launched a wrongful dismissal suit.
The Yukon Territory Supreme Court found Evans acted reasonably in refusing to return due to his concerns about how he would be treated. It awarded him 22 months’ notice — about $100,000. The union appealed.
The Yukon Court of Appeal set aside the award and found Evans had not acted reasonably by refusing the return-to-work offer and he failed to mitigate his damages. In a six-to-one ruling, the Supreme Court of Canada upheld the decision, finding Evans had not acted reasonably when he refused his employer’s request since the salary, working conditions and work were the same. The court also said the personal relationships involved weren’t beyond repair.
“In some circumstances it will be necessary for a dismissed employee to mitigate his damages by returning to work for the same employer,” the Supreme Court said. “Assuming there are no barriers to re-employment, it is consistent with the notion that damages are meant to compensate for lack of notice, and not penalize the employer for the dismissal.”
Justice Rosalie Abella dissented, noting the importance of considering the effects of job termination on employees.
“Firing an employee without notice, then requiring him to return temporarily to work at his former workplace because the unlawful dismissal resulted in bleak employment prospects has the perverse effect of requiring a wronged employee to ameliorate the wrongdoer’s damages,” said Justice Abella.
She said the return-to-work request had the “bizarre consequence of transforming a wrongful dismissal, attracting a substantial notice period, to a lawful one attracting none.”
Evans appears to contort the concept of mitigation and what the Supreme Court of Canada has always maintained about the vulnerability of the employee upon termination. It effectively provides employers with permission to recall a fired employee in the event they dislike the way negotiations are going.
In the 1997 Wallace v. United Grain Growers ruling, Justice Frank Iacobucci said the point at which an employment relationship ruptures is the time when the employee is most vulnerable and most in need of protection. If the employee is most vulnerable when the employment relationship ends, then allowing him to be recalled after being fired creates a greater vulnerability. Not only is this principle inconsistent with the Supreme Court of Canada’s approach in employment law, it doesn’t consider the emotional and psychological impact of termination on the employee and his concerns about returning to work after being terminated.
Further, if the law aims to minimize the damages from dismissal, then creating a situation where the employee could be asked to return to a potentially hostile environment could lead to arguments of constructive dismissal and greater damages.
Evans shifts the balance of power to the employer and creates a potentially intimidating environment for the employee. Instead of negotiating on equal footing, the employee is more susceptible to the employer’s whim, given that at any minute negotiations may cease and the employer may recall the employee.
Natalie MacDonald is a partner with Grosman, Grosman and Gale in Toronto. She can be reached at (416) 364-9599 or [email protected].
Most employees would likely reject such an idea, and many employers might not be jumping on that bandwagon either. But last month, the country’s top court upheld a ruling stating an employee in the Yukon had a responsibility to return to work with the employer that fired him in order to mitigate his damages. The fallout from the Supreme Court of Canada’s decision in Evans v. Teamsters Local Union No. 31 will have implications for wrongful dismissal and constructive dismissal cases for years to come.
Donald Evans was terminated after 23 years as a business agent with Teamsters Local 31 in Whitehorse following a bitterly fought election of a new executive he opposed. In the termination letter, dated Jan. 2, 2003, the union said it was prepared to discuss his severance package. Evans began corresponding through his lawyer in an effort to reach a settlement. Meanwhile, the union continued to pay his salary and benefits.
On May 23, 2003, the union said it couldn’t agree to his demands and asked him to return to work until Dec. 31, 2004 — the end of his 24-month notice period. Evans refused and launched a wrongful dismissal suit.
The Yukon Territory Supreme Court found Evans acted reasonably in refusing to return due to his concerns about how he would be treated. It awarded him 22 months’ notice — about $100,000. The union appealed.
The Yukon Court of Appeal set aside the award and found Evans had not acted reasonably by refusing the return-to-work offer and he failed to mitigate his damages. In a six-to-one ruling, the Supreme Court of Canada upheld the decision, finding Evans had not acted reasonably when he refused his employer’s request since the salary, working conditions and work were the same. The court also said the personal relationships involved weren’t beyond repair.
“In some circumstances it will be necessary for a dismissed employee to mitigate his damages by returning to work for the same employer,” the Supreme Court said. “Assuming there are no barriers to re-employment, it is consistent with the notion that damages are meant to compensate for lack of notice, and not penalize the employer for the dismissal.”
Justice Rosalie Abella dissented, noting the importance of considering the effects of job termination on employees.
“Firing an employee without notice, then requiring him to return temporarily to work at his former workplace because the unlawful dismissal resulted in bleak employment prospects has the perverse effect of requiring a wronged employee to ameliorate the wrongdoer’s damages,” said Justice Abella.
She said the return-to-work request had the “bizarre consequence of transforming a wrongful dismissal, attracting a substantial notice period, to a lawful one attracting none.”
Evans appears to contort the concept of mitigation and what the Supreme Court of Canada has always maintained about the vulnerability of the employee upon termination. It effectively provides employers with permission to recall a fired employee in the event they dislike the way negotiations are going.
In the 1997 Wallace v. United Grain Growers ruling, Justice Frank Iacobucci said the point at which an employment relationship ruptures is the time when the employee is most vulnerable and most in need of protection. If the employee is most vulnerable when the employment relationship ends, then allowing him to be recalled after being fired creates a greater vulnerability. Not only is this principle inconsistent with the Supreme Court of Canada’s approach in employment law, it doesn’t consider the emotional and psychological impact of termination on the employee and his concerns about returning to work after being terminated.
Further, if the law aims to minimize the damages from dismissal, then creating a situation where the employee could be asked to return to a potentially hostile environment could lead to arguments of constructive dismissal and greater damages.
Evans shifts the balance of power to the employer and creates a potentially intimidating environment for the employee. Instead of negotiating on equal footing, the employee is more susceptible to the employer’s whim, given that at any minute negotiations may cease and the employer may recall the employee.
Natalie MacDonald is a partner with Grosman, Grosman and Gale in Toronto. She can be reached at (416) 364-9599 or [email protected].
