Evans Revisited: The Potential for Mischief Where Constructive Dismissal Meets the Duty to Mitigate Damages with the Dismissing Employer

by E. Wayne Benedict

In early 2008 the Supreme Court of Canada released its judgment in Evans SCC, a case of wrongful dismissal. In the 6-1 decision, the majority held that Mr. Evans had failed to mitigate his damages by rejecting an offer of re-employment made by the dismissing employer shortly after it had terminated the employment contract. As a result, the award of the trial judge for damages in lieu of 22-months reasonable notice at common law was set aside in its entirety. The thesis of this paper is that the majority reasons in Evans opens the door for mischief by employers who may unilaterally make fundamental or substantial changes to an employee's contract of employment with little risk of being liable to pay damages in lieu of reasonable notice so long as the circumstances surrounding the termination of the employment contract are framed so as to avoid the appearance of serious damage to the employer-employee relationship.

A constructive dismissal occurs “where an employer unilaterally makes a fundamental or substantial change to an employee's contract of employment—a change that violates the contract's terms—the employer is committing a fundamental breach of the contract that results in its termination and entitles the employee to consider himself or herself constructively dismissed. The employee can then claim damages from the employer in lieu of reasonable notice.” Part II of this paper discusses constructive dismissal. Part III of this paper discusses the circumstances when a constructively dismissed employee has a duty to mitigate his or her damages by accepting re-employment with his or her former employer on a temporary basis according to the majority in Evans.

Part IV of this paper discusses the potential for mischief by employers taking advantage of the interplay between the principle of constructive dismissal and the employee’s duty to mitigate damages as elucidated in Evans. Part V sets out post-Evans jurisprudence in an attempt to glean whether Courts and tribunals will embrace Evans or limit its impact. Part VI concludes the paper by pointing out that the majority ratio in Evans can result in the “bizarre consequence of transforming a wrongful dismissal attracting a substantial notice period to a lawful one attracting none.” Evans arguably creates a legal oxymoron, in that situations where (1) “an employer unilaterally makes a fundamental or substantial change to an employee's contract of employment” (a constructive dismissal), and (2) “[w]here 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” are mutually exclusive. Perhaps the law ought not to require (on pain of forfeiting pay in lieu of reasonable notice for the employer’s fundamental breach of the employment contract) an employee to return to work for the dismissing employer at all considering that it is the rare employee who does not subjectively experience embarrassment, humiliation and loss of dignity when his or her employer unilaterally and fundamentally alters the employment contract (a unique subset of contracts marked by an inherent imbalance of bargaining power) disturbing the central role that work plays in the individual’s sense of identity and dignity at the time of dismissal when the employee is most vulnerable and hence, most in need of protection from the Courts.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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