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A recent Ontario case considered an employee’s claim that a temporary lay-off was in fact constructive dismissal, even after he refused a call back to work.

What Happened?

The employer was engaged in emergency restoration and remediation work for residential, commercial, industrial, and municipal clients. The employee, aged 53, began working for the employer in 1992 as a carpenter. He was later promoted and, at the time of the lay-off, his position was a health and safety training specialist.

In 2014, the employer experienced a significant decrease in its business. In January 2015, it permanently laid off 22 employees, with severance packages. The employer stated that it had decided which employees to temporarily lay off based on their years of service, skillsets and experience and it planned on recalling them. The employee knew about the permanent and temporary layoffs.

On October 15, 2015, the employer temporarily laid off the employee. On the same day, the employer’s vice-president of operations met with the employee and told him that because of the decrease in business, he would be temporarily laid off and recalled back to work as soon as possible when business improved.

The employee’s lay-off letter stated that the employer would pay 100% of the employee’s group benefits during the temporary layoff period and asked him to keep the employer informed about his ongoing availability and contact information so that it could recall him as soon as possible. The letter also asked him to return all of the company’s tools and equipment, including the company car which he would not use while on a temporary lay-off.

After the meeting, the employee emailed the vice-president, stating “I am available every day as always”. On October 19, 2015, the employee emailed again stating “I am available for work every day this week.”

On October 27, 2015, the employee, through his counsel, advised the employer that he considered his temporary lay-off to be a constructive dismissal. Counsel for the employer replied that there was a possibility that the employee would be recalled to work and that he would update him by November 9, 2015. The employee’s counsel immediately replied by email advising that the employee felt that the relationship had broken down and that he would not return to work but would start an action against the employer.

On November 10, 2015, the employer’s counsel sent a letter to counsel recalling the employee to “active employment”.

On November 12, 2015, the employer’s counsel emailed asking if the employee would return to work. Counsel replied that he would not. No inquiries with respect to the recall were made.

The employee alleges that the employer’s offer “was a sham made only in response to his litigation and not a bona fide attempt to return him to work.” He believed that it would have been embarrassing and degrading to return to work.

As a result, the employee brought a motion for summary judgment of his action for wrongful dismissal. He claimed he was constructively dismissed by reason of a lay-off after 23 years of employment. He argued that there was no employment term giving the employer the right to temporarily lay him off and that he did not consent to the lay-off. The employee also claimed that the employer failed to provide him with work and compensation in violation of the fundamental terms of employment.

The employer alleged that the employee agreed to his lay-off by providing his availability to work on October 15 and 19, 2015. The employer denied he was wrongfully dismissed and submitted in the alternative that if the employee was constructively dismissed, he failed to mitigate his damages by refusing a recall to his employment.

The Issues

The main issues were whether the employee was constructively dismissed when he was laid off and, if so, whether the employee made reasonable efforts to mitigate his damages.

The Decision

At the outset, the court concluded that the employee had been constructively dismissed. It did not find that, by providing his availability to work, the employee agreed to the lay-off or that it was a term of the employee’s employment that the employer could lay him off temporarily. The court stated:

“[The employee’]s advice to [the employer] on his availability for recall cannot be construed as evidence of his agreement to change such a significant term of employment. Similarly, neither does his knowledge and understanding of [the employer]’s business difficulties have the effect of altering such a significant term of employment.”

The court found that the employee was therefore constructively dismissed on October 15, 2015 and that he was consequently entitled to be paid damages for the employer’s failure to provide him with reasonable notice of his termination of employment, subject to his obligation to mitigate his damages.

The employer did not allege that the employee’s job search efforts were insufficient, but rather that he failed to mitigate his damages when he refused the employer’s offer to be recalled to work. The employee submitted that one reason for refusing the offer of re-employment was because it would be too embarrassing and degrading for him to return to work, but gave no further evidence in this regard.

After reviewing the evidence and testimony, the court stated:

“I must consider the factors set out in the Evan’s case and the inquiry about “whether a reasonably objective individual in his circumstances would not have concluded that returning to work would be too embarrassing, humiliating, and/or degrading”. I am of the view that a reasonably objective individual in his circumstances would not have concluded that returning to work would be too embarrassing, humiliating, and/or degrading. [The employee] has given no evidence as to how or why he would be “humiliated, embarrassed or degraded”. The evidence is that, regardless of any offer that would have been made by [the employer], [the employee] never had any intention of accepting work under any circumstances. He never considered or evaluated the offer to work at [the employer]. He commenced an action against [the employer].”

As a result, the court found that the employee’s refusal to consider the employer’s offer of work was a failure to mitigate his damages. He was therefore only entitled to damages of $4,846 for the period from the date of the layoff to the date of recall (calculated on the basis of his base salary of $72,000 per annum).

Get Advice

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Campbell Bader LLP. We regularly advise both employers and employees on a wide range of issues that arise at work. Contact us online or by phone at 905 828 2247 to schedule a consultation.