Accepting A New Position With Your Current Employer

Employees who are fired and wish to claim against their former employers for damages for wrongful dismissal must make reasonable and diligent efforts to replace their income. Under the usual circumstances, this means that the fired employee leaves the workplace and begins looking for work from their home. As you may know, failure to mitigate (obtain alternative employment income) will knock out a claim for wrongful dismissal. It is the employer who must prove at trial that the employee has “failed” to mitigate. Generally speaking, a failure to mitigate will only be proven if the employer can show that the employee was offered a job that was reasonable under the circumstances to accept, and that the employee refused to accept it. Not many employers are successful at proving “failure to mitigate”.

But what is the employee’s obligation to accept a different job from the same employer? This situation will arise most often when the employer constructively dismisses the employee by making a change to a fundamental term of the employment contract and then offers the employee continued employment doing that altered job. If the employee refuses to accept the altered position, will the Court find that he or she “failed to mitigate” and knock out their claim for damages? Put differently, does an employee have to remain with the employer after being constructively dismissed?

A 1989 Ontario Court of Appeal case (Misfud) stated that an employee might have an obligation to mitigate a constructive dismissal by continuing to work for the employer. Failure to do so would therefore mean that the employee has failed to mitigate and his claim for wrongful dismissal would thus be compromised. This view however has not been completely embraced by other jurists. In one case (Rose v. Shell Canada Ltd.) the Court found that it was unreasonable to require an employee whose contract was repudiated by demotion to carry out the very position that effectively was the breach.

The answer to this question depends very much on the facts of the case. For example, when determining whether the employee should continue to work for the employer, Courts will examine various factors such as whether the employee must then work in an atmosphere of “hostility, embarrassment or humiliation” (Campbell v. Merrill Lynch Canada Inc.). The case for not continuing to work for the employer is stronger where the employer lowers the employee’s remuneration either through a reduced salary or change in bonus. In one case, an employer demoted a general sales manager to sales representative. The Court held that there was no obligation for the employee to stay on with the employer and suffer a substantial loss of prestige (Wilding v. Quest Foods Ltd.). An executive was held to have no obligation to mitigate a constructive dismissal by accepting a position when the position was not adequately presented with enough detail to analyze it or know with certainty what remuneration he would be paid (Stevens v. Globe and Mail).

If your employer has presented you with a change to a fundamental term of your employment contract and has offered to employ you in the “new” position, call me before you decide whether to accept the new position.