An Offer of Re-employment – When to Say No

The general issue of mitigation, that is, the obligation to look for alternative employment following termination of employment has been reviewed in a prior post.

The Leading Case

In 2008, the Supreme Court of Canada considered a fact situation in which the plaintiff employee had been fired without cause[1]. An offer of severance had been extended by the employer which then resulted in the usual competing positions between the two parties as to the terms of the severance payment. The employer then relented, withdrew its offer, and requested that the employee (who held a senior position with the defendant union), to return to work on the same terms and conditions as he had previously held.

To the astonishment of many, the Supreme Court sided with the employer’s position and denied the employee’s claim. The Court concluded that when a good faith offer of re-employment had been made, the employee should return to work, presuming that the position is a comparable one, the work is not demeaning, and the relationships between the parties are not acrimonious.

The failure of the employee to accept such an offer in these circumstances would be a failure to mitigate.

The critical aspect of this decision is that the offer of re-employment be one made in good faith.

Employer Acting Shabbily

A good example of what may be a bad faith offer in this context and the ramifications to the employer is shown in a recent decision in British Columbia.[2]

The employee worked as sales representative selling medical alert systems. After 12 years of employment, and at age 63, the plaintiff was given two months working notice of termination.

Following a letter from his legal counsel requesting more substantial compensation, and still within the period of working notice, the company offered renewed employment but on very different terms. The amended terms included the following:

  1. An agreement that the plaintiff had resigned his prior employment;
  2. A three month probationary term;
  3. Terms which violated the Employment Standards Act;
  4. New non-compete terms;
  5. The employer’s right to terminate by minimum statutory pay;
  6. Minimum sales numbers; and
  7. A commission plan which the employer could change at will.

The employee’s response was to commence legal proceedings after which the same offer was again extended, absent the probationary term. After pre-trial discovery was completed, yet again a third offer was presented. On this occasion, the resignation acknowledgement was deleted. The revised offer was for a 12 months fixed term with the employer’s option to renew. Any extension was to be subject to the right to terminate by the minimum statutory notice. Termination within the 12 months required 50% of the remainder of the term to be paid.

Court Says Not So Fast

These offers all missed the mark of being made in good faith. The Court completely rejected any notion that the employee would need to consider any of them as a mitigation obligation. The offers were clearly substantially at odds with the employee’s terms of employment. In addition, the Court noted that, given the passing of four and one-half months since termination, when the third offer was made, it should further have added compensation for lost earnings to date, even if otherwise seemingly comparable.

The Offers Backfire

Not only was the employee successful in his claim by the award of 12 months compensation, he was also awarded $25,000 aggravated damages due to the unfair conduct of the employer in this strategy of offers of alleged comparable employment.

Be Wary

Although the employee hit all the bells in this most recent case, any offer of re-employment must be examined scrupulously by a terminated employee. When such an offer is made in good faith, on comparable terms and where there is no acrimony, it can be a complete defence to a wrongful dismissal claim. In many situations, the employee will be reluctant to return to the employ of a company which has just terminated him or her. This is not a time, however, for an emotional response. It need a careful surgical analysis.

As noted in this instance, the employer should compensate for lost salary to the date of re-employment.

Of further note is whether the employer must pay the statutory severance or statutory notice on termination, even where there is an offer of re-employment.[3] There is no earnings offset on a termination for post termination earnings, as discussed previously. No case has yet to consider this issue.

Get Legal Advice

If you are facing a termination and an offer of re-employment, you must take legal advice as soon as possible in order to protect your rights. The law often does not reflect common sense. This situation requires the insight of a knowledgeable employment lawyer.

If you are an employee seeking legal advice in this context, contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation

 

 

[1] Evans v Teamsters

[2] Ensign v Price’s Alarm Systems

[3] This sum could be as much as 34 weeks compensation.