A duty to mitigate is imposed on any employee after they have been terminated. The duty to mitigate means that after an employee is terminated, the employee must take reasonable steps to limit their losses. The limiting of losses usually includes looking or attaining other work. If an employee fails to mitigate, the court may reduce any award for damages that the employee would have otherwise been entitled to. On occasion after an employer has terminated an employee, they offer the employee an alternative position. The Ontario Superior Court of Justice’s Decision in Peticca v Oracle Canada ULC, 2015 CarswellOnt 5450 discusses such a situation and whether a failure to accept an offer of an alternative position is a failure to fulfill a duty to mitigate.
The plaintiff, Ms. Peticca (the “Plaintiff”) was terminated by her employer, Oracle Canada (the “Defendant”), who was at the time of the Plaintiff’s termination, restructuring its business. The Defendant’s restructuring included moving some of its Canadian jobs to the United States (US). The Plaintiff worked in a mid-management position as a General Sales director.
The Defendant, approximately three (3) weeks after the Plaintiff’s termination, told the Plaintiff that she would receive either an alternative job offer or a severance package. The alternative position required the Plaintiff to manage three teams, two of which were in the US and reporting to the Vice President in another State. As such, the new position required the Plaintiff to go to the US for two (2) weeks of every month.
It was not contested that the alternative position included duties and scope which were exceedingly similar to the Plaintiff’s pervious position. Yet, the Plaintiff argued the alternative position would substantially affect her childcare responsibilities, particularly because her husband also travelled for his employment. As such, the Plaintiff rejected the offer from the Defendant for the alternative position. She also brought an action for wrongful dismissal.
The main issue for the court to consider was whether the Plaintiff, in failing to accept the alternative position with the Defendant, has failed to mitigate her losses.
THE SUPERIOR COURT OF JUSTICE’S DECISION
The Court first considered the Supreme Court of Canada (“SCC”) case Evans v. Teamsters, Local 31, 2008 SCC 20 (Evans). Evans stands for the principle that employees who have been terminated are expected to mitigate their losses by accepting an alternative position if the alternative position provides the following: (1) the same salary; (2) the duties/work conditions are not substantially different; and (3) the position is not demeaning. These three factors from Evans are considered on an objective and contextual analysis basis.
Next, the Court applied the Evans analysis to consider if the Plaintiff should have been expected to take the alternative position offered by the Defendant. As aforementioned, it was not contested that the duties and scope of the alternative position was very similar to that of the Plaintiff`s previous position. However, the Plaintiff would travel at most two (2) to four (4) times per year in her old position as compared to the two (2) weeks per month required in the proposed alternative position. The Court determined that the changes with respect to travel amounted to a drastic and substantial change to the Plaintiff’s employment conditions. As such, the Court concluded that the alternative position offered to the Plaintiff was substantially different, failing the second part of the Evans analysis. Therefore, the Plaintiff’s failure to accept the alternative position did not amount to the Plaintiff failing to mitigate.
Although there is a duty on employees to mitigate their losses, rejecting an alternative position will not always amount to a breach of this duty. The above summary highlights the importance of both the objective and contextual analysis that is used to determine if rejecting a proposed alternative position would lead to a breach of the duty to mitigate. It is advisable that an employee who is offered an alternative position upon termination assess the three Evans factors discussed above before rejecting or accepting it. The consequences could be significant if the employee fails to accept an alternative position that is for the same value, not substantially different and is not demeaning.