Failure to accept reasonable re-employment offer will ‘considerably reduce the amount of severance'
An Alberta court has dismissed a worker’s wrongful dismissal lawsuit because the worker didn’t accept a reasonable offer to return to work at the same job.
The worker, 75, was an unlicensed mechanic for New West Truck Centres, a heavy-duty truck sales and service company in Red Deer, Alta. He joined New West in 2004 he performend inspection work on new trucks before they were delivered to customers. He had a written employment contract with no termination provisions.
After the COVID-19 pandemic, New West’s business was slow and the worker often spent the day cleaning the shop rather than working on trucks. In September 2023, he inquired whether it would be possible to be laid off.
The superintendent called the director of corporate services and told her that the worker wanted to retire but he wanted to be able to collect employment insurance (EI). They decided to offer the worker a letter of retirement with four months’ working notice.
On Oct. 16, the worker was called into the superintendent's office and was given a letter titled “Working notice of your retirement” that provided four months’ working notice for the end of his employment. The worker was confused and angry, because he hadn’t said he was retiring and had only inquired about being laid off.
Misunderstanding about retirement
Providing the letter of retirement wasn’t an advisable course of action for the company, says Roxanne Davis and employment lawyer and managing partner at Carbert Waite in Calgary.
“It's easy to see how that kind of misunderstanding could happen, though, if there was an overture by the worker that he was thinking about retiring but would like to be able to collect EI,” she says. “But you never want to make assumptions about what somebody's retirement date - you always want the employee to lead those discussions of what the timing is going to be.”
The superintendent went back to the director of corporate services, who then drew up a letter of termination. On Oct. 19, the worker was given the letter, which provided three months’ working notice. He didn’t ask for any additional notice or severance pay at the time, although he remarked, “I thought I would get more out of you guys.” He was told that he could review the letter with a lawyer and they couldn’t lay him off because they still had work for him.
“The amount of notice offered was low for the worker's age and length of service, but it's not unusual for employers to start out with a severance offer considerably lower than what common law notice might be, just to see how cheaply they can manage the termination,” says Davis. “That may be what [New West] was thinking here, and they may have been surprised that the worker didn’t immediately respond that it was unacceptable and he wanted more notice than that.”
The worker advertised to sell his tools and toolbox and sold them on his last day with New West, which was Jan. 16, 2024. The company held a retirement party for him and he received a watch and other gifts. However, according to the worker, everyone knew he wasn’t actually retiring.
The worker applied for three different jobs the following month, but he didn’t receive any offers. He didn’t apply for any other jobs because his age made him uncomfortable doing so and he had some health problems.
Offer of re-employment
In March, the worker’s lawyer sent a letter to New West saying that the worker wasn’t pleased with how things had ended. New West’s vice-president of HR spoke with the superintendent, foreman, and another executive, who all agreed that the worker would be welcomed back with no concerns. On March 18, the company sent the worker an offer of re-employment with the same wages and employment conditions. If he accepted, New West would also pay him an amount to compensate him for the wages he would have earned had he not been terminated two months earlier.
The worker received the letter but he chose not to accept, as he thought that he would have to buy new tools. He also felt that New West would look for a reason to fire him if he returned because business was slow. However, he didn’t reach out to the company or speak to anyone about it. According to New West, the fact that he had sold his tools wasn’t an obstacle to him returning to work.
The worker sued for wrongful dismissal, claiming entitlement to another 21 months of notice. He also sought aggravated damages. New West argued that the worker failed to mitigate his damages when he rejected its offer of re-employment.
The court noted that the termination letter was instigated by the worker’s request to be laid off and the three months’ working notice provided was more than the statutory minimum. The company also paid his full wages even when work was slow, so the company operated in good faith towards the worker, the court said.
The court also noted that the Supreme Court of Canada in Evans v. Teamsters Local Union No. 31, 2008 SCC 20, held that “in the absence of conditions rendering the return to work unreasonable, on an objective basis, an employee can be expected to mitigate damages by returning to work for the dismissing employer.”
A reasonable way to mitigate damages
Based on New West’s evidence, there was no animosity or hostility towards the worker and management was unanimous in its willingness to have him return to work, said the court in finding that the offer of re-employment was genuine, unconditional, and for the same position, responsibilities, location, and pay. As a result, the court determined that it was objectively reasonable for the worker to return to work for New West to mitigate his damages.
The worker’s reasons for not accepting the offer were based on assumptions that he never tested, says Davis.
“He thought that he would need to buy all of his tools back, but no one had actually ever told him that - it would have been easy for him to just send an email or make a phone call and ask if the company could supply him with any necessary tools,” she says. “And another reason was that he didn't think that there would be enough work for him and that he would end up just getting laid off, but that was found to just be an assumption with no evidence to support it.”
An offer of re-employment is a good strategy where there might have been a misunderstanding or miscommunication that led to the end of employment, according to Davis.
“They thought that he wanted to be done work and heard that things didn't go the way that he expected, and it seems to have ended on a friendly note,” she says. “In those circumstances, it really puts the employee in a tight spot to receive an offer of re-employment and come up with a good reason for why it's reasonable not to accept - and if they can't come up with a good reason for not accepting the offer, then it’s going to considerably reduce the amount of severance and notice to which they’re entitled.”
Failure to mitigate
The court noted that the worker’s application to three jobs in total didn’t constitute reasonable mitigation efforts, although New West didn’t show that the worker could have found work at his age and with his experience – outside of its offer of re-employment - if he had made reasonable efforts.
The court dismissed the worker’s claim in its entirety.
A lot of the problems in this case could have been remedied with better communication from both sides, which is always a good strategy, says Davis.
“Rather than the first letter proposing a retirement date, it would have been better to have a conversation with the worker about what his plans were before sending that type of communication,” she says. “And for the worker, when the offer of re-employment came out, if he had just communicated and asked some questions, he would have been in a better position.”
When it comes a potential argument that a dismissed employee failed to mitigate, it’s a also good strategy to keep track of the job market and ensure the termination is professional, according to Davis.
“Keep records of what other positions might be available, so if you receive a demand letter from an employee asking for more severance, you can assess what opportunities are available before you evaluate your response and ask what efforts the employee has made to apply,” she says. “And if you keep everything friendly and professional, that removes an excuse for the employee to reject a re-employment offer [as part of mitigation efforts].”
