In the recent decision, Gent v. Strone Inc., the Ontario Superior Court held that a wrongfully dismissed employee failed to mitigate his damages when he refused a recall to employment from a temporary layoff.
David Gent had been employed by Strone Inc. for over twenty-three years when he was temporarily laid off. Hired in May 1992 as a carpenter, Gent was promoted and, at the time of the layoff, was a Health & Safety Training Specialist.
Strone does emergency work for restoration and remediation for residential, commercial, industrial, and municipal clients. The volume of its work is dependent on demand.
In 2014, Strone experienced a significant decrease in its business. In January 2015, the company permanently laid off almost two dozen employees, with severance packages. In October 2015, Strone permanently laid off more employees with severance packages. It also temporarily laid off Gent and two other employees. Strone advised Gent that he was being laid off temporarily because of the decrease in business, and would be recalled to work as soon as possible when business improved.
Gent’s layoff letter:
- stated that Strone would pay 100% of his group benefits during the temporary layoff period, including the premiums that he paid himself;
- asked him to keep Strone informed about his ongoing availability and contact information so that it could recall him as soon as possible; and,
- 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 layoff.
Gent was fifty-three years old at the time of the layoff.
Later that month, Gent’s counsel advised Strone that he considered his temporary layoff to be a constructive dismissal. Strone’s counsel advised that Gent may be recalled to work, to which Gent’s counsel immediately replied that his client felt the relationship had broken down and that he would not return to work.
In November 2015, Strone recalled Gent to “active employment”. Gent refused to return to work.
Instead, he brought a motion for summary judgment of his action for wrongful dismissal, claiming that the layoff amounted to constructive dismissal. Strone argued that Gent was not wrongfully dismissed, and in the alternative that if he was constructively dismissed, he failed to mitigate his damages by refusing a recall to his employment.
The Court found that Gent was constructively dismissed in October 2015, because his employment contract did not give Strone the right to temporarily lay him off. He was therefore entitled to damages for Strone’s failure to provide him with reasonable notice of his termination of employment, subject to his obligation to mitigate his damages.
The Court went on to hold that Gent failed to mitigate his damages, however, when he refused Strone’s offer of work.
The central issue is “whether 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 will consider the work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment.
In this case, the employment relationship was amicable before the layoff, and Gent testified that Strone was a good workplace and that he had enjoyed working there. Strone had also assured Gent that he would be treated normally, with no reprisals or hard feelings, following his return to work, and that it valued him as an employee.
The Court held that Gent provided no evidence as to how or why he would be “humiliated, embarrassed or degraded” by returning to work.
Ultimately, the Court found that Gent was unreasonable because he could not explain why it would have been humiliating to return to work and because he completely ruled out the possibility of returning to work even though he knew or ought to have known that being recalled was a distinct possibility.
The Court concluded that Gent was entitled to damages of $4,846.50 from the date of his termination of employment to the date he could have commenced employment with Strone, a mere three-and-a-half weeks. If he had not failed to mitigate, the relevant factors would have supported an award of a notice period of eighteen months.
This decision should serve as a valuable lesson for both employers and employees. Strone avoided more than $100,000 in damages by offering to recall Gent early on in the reasonable notice period. Employees should take note that even if they have been dismissed or constructively dismissed, they have a duty to mitigate, which can include accepting an offer of re-employment. Otherwise, their entitlement to damages may be substantially reduced.
Sign up for our e-Newsletter for the latest updates and case studies in employment law.
- Wrongful Dismissal in Ontario: What it really means
- Mitigation Requirement After Termination Further Explained by Ontario’s Highest Court
- Ontario Court of Appeal Rules on Employer’s Manner of Dismissal – Duty of Good Faith and Fair Dealing