Evans v Teamsters Local Union No. 31 [2008] SCC
Facts: This case stems from a wrongful dismissal action brought by Donald Evans, who had been employed as a business agent with the Teamsters Union’s Whitehorse office. Mr. Evans was dismissed on January 2, 2003, following a heated election campaign in which he had been an outspoken supporter of the defeated incumbent Union President. Donald Evans worked as a business agent for the Teamsters for over 23 years. In early 2003, he was dismissed after a new union executive was elected. Through his lawyer, Evans told the Teamsters, the employer in this case, that he considered 24 months’ notice of termination to be reasonable and would be prepared to accept 12 months of continued employment along with a lump sum payment equal to an additional 12 months of salary. This proposal was rejected. Instead, the Teamsters asked him to return to work for the balance of his 24-month notice period. If he refused, his employment would be terminated immediately without further notice and he would be considered to have failed to mitigate his losses. He ultimately refused, and was dismissed.
Issues: (1) Was Evans wrongfully dismissed? (2) Was he entitled to damages? (3) Was he required to mitigate his losses by going back to work for his former employer?
Holding: (1) NO, Evans was NOT wrongfully dismissed; (2) NO he was NOT entitled to damages; and (3) YES he was required to mitigate his losses by going back to work for his former employer.
Reasons: Initially, the trial judge found that Evans was indeed wrongfully dismissed. He was awarded $100,000 in damages. The trial decision was then overturned by the Yukon Court of Appeal, which agreed with the employer that Evans had failed to mitigate damages by not considering the offer put on the table by the Teamsters. The Supreme Court of Canada upheld the appeal court decision. It agreed that in some circumstances it will be necessary for a dismissed employee to mitigate his or her damages by returning to or remaining at work for the same employer.
The SCC ultimately held that in some circumstances it will be necessary for a dismissed employee to mitigate his or her damages by returning to or remaining at work for the same employer. That is to say, the court held that (provided that the employee won’t be subject to hostility, embarrassment, or humiliation) an employer can satisfy its notice obligation by making the employee an offer to return to work for the balance of the notice period – and not doing so would be a failure to mitigate losses that were avoidable by the fired employee (plaintiff).
The SCC’s reasons contain a number of interesting points that are useful for employers: First, the court confirmed that employers who give sufficient working notice of termination aren’t required to pay the employee above and beyond that notice.
Second, the court reinforced the principle that damages in wrongful dismissal cases are meant to compensate for lack of notice and not to penalize the employer. Moreover, the employer’s obligation to pay damages in lieu of notice is subject to the employee making a reasonable effort to mitigate his losses by seeking an alternate source of income.
Third — and this is the new one — the court held that provided that the employee won’t be subject to hostility, embarrassment, or humiliation, an employer can satisfy its notice obligation by making the employee an offer to return to work for the balance of the notice period. According to the court, it would be nonsensical to say that "working notice" is OK but that an offer to continue or resume employment as a means of reducing the damages claim is not.
Interestingly, the court adopted an objective test to determine whether reemployment is an appropriate option. The question is: Would a reasonable person consider the offer as a legitimate employment opportunity?
If the employee is offered a position at the same salary with similar benefits and status and if the personal relationships haven’t deteriorated to the point of hostility and no litigation has been brought, the offer would likely be considered a reasonable one.
Finally, the court made a point of noting that damages awarded because the employer acted in bad faith in the manner of dismissal (called "Wallace damages") are never subject to mitigation. This is also new. This part of the ruling “ups the ante” for employers who act in bad faith
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