Failure to accept recall offer cuts down long-term worker’s constructive dismissal damages

Employer had no right to temporarily lay off long-time employee, but employee’s refusal of reasonable offer 4 weeks later was a failure to mitigate damages
By Jeffrey R. Smith
|Canadian Employment Law Today|Last Updated: 04/10/2019

An Ontario company constructively dismissed a 23-year employee when it tried to temporarily lay him off, but only has to pay the employee four weeks’ wages because the employee didn’t accept a recall that would have been a reasonable mitigation of his damages, the Ontario Superior Court of Justice has ruled.

David Gent, 56, was hired as a carpenter in May 1992 by Strone, a company that does emergency restoration and remediation work for residential, commercial, industrial, and municipal properties in Toronto. Gent was eventually promoted to health and safety training specialist.

Gent’s duties as a health and safety training specialist included training employees at Strone’s head office and other locations, developing training materials, performing safety audits on Strone’s processes, liaising with the Ontario Workplace Safety and Insurance Board, and chairing the company’s joint health and safety committee. He worked mostly in the head office and occasionally visited client worksites but his role didn’t require any management or supervisory responsibilities.

In 2014, Strone’s business took a significant downturn and the company decided to permanently lay off 22 employees with severance packages. The layoffs took place in January 2015.

Later in the year, Strone decided to permanently lay off additional employees and temporarily lay off certain employees who had long-term service and skillsets that the company could use after recalling. On Oct. 15, 2015, Gent was told that he was being temporarily laid off due to the decrease in business. He was also told he would be recalled back to work as soon as possible and in the meantime, Strone would pay his group benefits premiums. Since the length of the layoff was unknown, Gent had to return all company equipment he had in his possession, but was asked to keep Strone informed about his availability and contact information.

After his layoff meeting, Gent emailed Strone’s vice-president with his contact information and said, “I am available every day as always.” Four days later, he emailed again to say he was available for work every day that week.

Five days after Gent’s layoff, on Oct. 20, a major hotel hired Strone to repair significant damage. Company management discussed recalling Gent for this project, as he often worked on large jobs, but the company didn’t yet know the scope of the job so it held off until it had more information.

However, Gent contacted Strone on Oct. 27 and informed the company through legal counsel that he considered his temporary layoff to be constructive dismissal. Strone responded that it might be able to recall him and it would let him know by Nov. 9, but Gent said he felt the employment relationship had “broken down” and he wouldn’t return to work with Strone.

Strone sent a letter to Gent’s legal counsel on Nov. 10 recalling Gent to “active employment,” saying the hotel job involved issues with asbestos and mould, for which Gent was trained to handle. It asked if Gent would return to work for this job, but Gent again refused, later claiming that the offer “was a sham made only in response to his litigation and not a bona fide attempt to return him to work.”

Gent proceeded with a constructive dismissal claim against Strone, arguing that it would have been “embarrassing and degrading to return to work” when Strone made the recall offer. He also claimed there was no employment term giving Strone the right to temporarily lay him off without his consent.

Strone argued that Gent agreed to the layoff when he followed up twice providing his availability to work and, if it was constructive dismissal, he failed to mitigate his damages when he refused the company’s recall offer.

The court found there was no evidence that there was a term of employment allowing Strone to temporarily lay Gent off. Gent wasn’t a unionized employee subject to a collective agreement with layoff privileges, and neither was there an employment contract providing for layoffs. The fundamental term of employment in the relationship was that Strone provide Gent with work and compensation; trying to temporarily lay him off was a significant alteration of Gent’s employment, said the court.

The court also found that Gent’s advising of his availability wasn’t enough to conclude he agreed to such a significant change to his employment, as there was no formal agreement. Gent’s knowledge of Strone’s business difficulties also didn’t justify the change, the court added.

The court determined Strone constructively dismissed Gent on Oct. 15, 2015, when it informed him of the temporary layoff. However, the court agreed with Strone’s assertion that Gent’s refusal of its recall offer was a failure to mitigate his damages and, as a result, a lessening of Gent’s damages in lieu of reasonable notice was warranted.

The court noted that Gent had no previous issues with his workplace and had a good working relationship with Strone — he put in more than 23 years with the company. The company continued his benefits payments and repeatedly advised him to stay in contact with it, so Gent was aware the intention was to recall him at some point. And the company did try to recall Gent to his same position and under the same terms of employment, but it happened after Gent had started constructive dismissal litigation — Gent refused to even consider the offer, which didn’t make sense given the lack of evidence there would be any problems or negative impact on Gent if he returned.

“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 court said. “I find that it is reasonable to conclude that Mr. Gent’s position that the fact that he had been ‘temporarily laid off’ led to the total breakdown of the employment relationship between the parties, was not supported by the evidence and was not a conclusion that a reasonable person would reach.”

The court found that had Gent would have been entitled to a notice period of 18 months’ pay as damages for constructive dismissal, given his length of service with Strone. However, since Strone made a reasonable offer of re-employment when it tried to recall him, the company was only ordered to pay him damages for the time of his layoff to the time of the recall — just under four weeks’ pay equalling $4,846.50.

For more information see:

• Gent v. Strone Inc., 2019 CarswellOnt 116 (Ont. S.C.J.).

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