When someone loses their job, they may receive severance from their employer. Severance is often provided in lieu of notice, and can fluctuate based on an employee’s position, age, education, and likelihood of finding comparable employment. When an employee does not agree with severance offered from an employer, they can sue the employer for wrongful dismissal in an attempt to receive a higher severance payment.  Meanwhile, an employee also has what is known as a “duty to mitigate,” meaning it is their responsibility to try to find new work after losing their job. In a recent case before the Ontario Superior Court of Justice, an employee was awarded damages incurred as a result of finding new work.

Background

The employee began working for the employer in 1999 and was given a series of promotions and increases in responsibilities over her first decade-and-a-half with the employer.

In 2013, the employer had gone through a major corporate merger and reorganization and their office in Southwestern Ontario, where the employee worked, was closed. At this time, the employee had worked there for close to 15 years, and was a valued and experienced manager. When the office in Southwestern Ontario closed, she was offered, and accepted, a job at the employer’s Toronto office. The employee moved her family, including her school-aged child, to the Toronto-area. She officially transferred to the employer’s head office in Toronto in June 2014 with the title of Senior Manager, Accounting.

Another ownership change occurred in the spring of 2015. The new owners began to integrate the employer’s management team into its existing operations. This led to a series of unilateral changes to the employee’s responsibilities, reducing them significantly. The employee felt, and the court agreed, that her responsibilities were reduced by about 20%. She hinted to the employer that she felt she was experiencing constructive dismissal.

Throughout the summer of 2015 the employee had additional responsibilities removed from her workload. She had no idea what the possibility of career advancement with the employer would be. When asked about what was going to happen to her, her manager had said that “we don’t have any plans.”

The employee received a LinkedIn message from another company on August 26, 2015, advising her they were looking for an Accounting Manager at their office located in Southwestern Ontario. After exploring the opportunity, she accepted the job and resigned, stating she considered herself constructively dismissed, on September 8, 2015.

The employee sued the employer after she started her new job, seeking to recover losses from her reduced income and moving expenses.

Was the employee constructively dismissed?

The court first asked whether the employee had been constructively dismissed.

The test for constructive dismissal was re-established by the Supreme Court of Canada in 2015. This analysis first inquires whether there had been a unilateral change in employment and if so, whether the change(s) substantially alter an essential term of the employment contract. Once this has been established, the court then asks whether “at the time the [breach occurred], a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were being substantially changed.” The second part of the test asks whether the employee could reasonably conclude that the employer no longer considers itself bound by the terms of the employment contract.

In looking at the first step of the test, the court concluded that several functions fundamental to the employee’s role as Senior Manager, Accounting, had been taken away from her. The employer was found to have unilaterally changed the job, breaching the terms of the employment contract. The court also found that a reasonable person would not have viewed those changes as minor. The employer’s changes to the employee’s responsibilities also led the court to conclude that the second part of the test had been established.

The court awarded the employee 15-months of reasonable notice. It then turned to the employee’s request for damages coming from her relocation, specifically the sale of her home outside Toronto, moving expenses, and expenses associated to communicating to Southwestern Ontario before moving.

Recouping moving expenses

The court confirmed that the law allows for the recovery of real estate commission, moving expenses, and legal fees incurred by an employee as a result of wrongful dismissal, quoting a 2015 decision that said “an employee who is wrongfully dismissed is entitled to recover the value of all losses from the failure to have been given reasonable notice of the termination of his or her employment”

The court found the employee’s moving expenses to be reasonable. She had moved to Toronto at the employer’s request. In light of this, the court said

… it would be inequitable to allow the (employer) to benefit from the (employee’s) mitigation efforts while at the same time denying her reimbursement for all costs she incurred to achieve that positive outcome. I therefore conclude that the (employer) should reimburse her for all reasonable expenses incurred in mitigating.

After adding up the sum of moving-related expenses, the court awarded the employee $45,000 in expenses related to her move back to Southwestern Ontario.

The employment law team at Duncan, Linton LLP works with both employees and employers on employment law matters including those arising from a dismissal or termination. We give timely and practical advice to employees while also helping employers prepare for dismissals in a way that minimizes risk and ensures that all legal obligations owed to an employee are met. Please call us at 519-886-3340 or reach us online to talk today.