Question: We are reorganizing our company and have reduced the position of one of our managers to that of senior sales associate. As a manager the employee received a yearly salary. But the compensation for the senior sales associate position is commission based. We do not dispute the fact this employee has the right to claim constructive dismissal, but we would like to know whether this individual is obliged to accept the senior sales associate position in order to mitigate his damages.
Answer: A constructively dismissed employee’s entitlement to damages is subject to the employee’s duty to mitigate his losses, just like any other wrongfully dismissed employee. This means the employee must make reasonable efforts to obtain alternative employment. In order to determine whether the employee is obliged to accept the senior sales position as part of his duty to mitigate, the court will consider a number of factors.
In the leading case on constructive dismissal and mitigation, the court said where the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships involved are not acrimonious, it is reasonable to expect the employee to accept the position during a reasonable notice period or until he finds acceptable employment elsewhere.
It appears the change in position in this case would be considered a demotion for the individual involved. If the compensation has been significantly reduced, there is a good chance a court would find, in this case, the employee is not obligated to accept the sales position.
But just because there has been a demotion it does not necessarily mean the court will find the employee does not have to accept the new position in mitigation of his damages. Much will depend on the nature of the relationship which exists between the employer and the employee. If there is evidence of hostility, embarrassment or humiliation, the employee will not be expected to work in such an environment. But where the employer demonstrates a continued respect for the individual as an employee and a desire to have him remain with the company, a court might consider it to be unreasonable to refuse employment.
Answer: A constructively dismissed employee’s entitlement to damages is subject to the employee’s duty to mitigate his losses, just like any other wrongfully dismissed employee. This means the employee must make reasonable efforts to obtain alternative employment. In order to determine whether the employee is obliged to accept the senior sales position as part of his duty to mitigate, the court will consider a number of factors.
In the leading case on constructive dismissal and mitigation, the court said where the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships involved are not acrimonious, it is reasonable to expect the employee to accept the position during a reasonable notice period or until he finds acceptable employment elsewhere.
It appears the change in position in this case would be considered a demotion for the individual involved. If the compensation has been significantly reduced, there is a good chance a court would find, in this case, the employee is not obligated to accept the sales position.
But just because there has been a demotion it does not necessarily mean the court will find the employee does not have to accept the new position in mitigation of his damages. Much will depend on the nature of the relationship which exists between the employer and the employee. If there is evidence of hostility, embarrassment or humiliation, the employee will not be expected to work in such an environment. But where the employer demonstrates a continued respect for the individual as an employee and a desire to have him remain with the company, a court might consider it to be unreasonable to refuse employment.
