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June 22, 2012

Should I Stay or Should I Go?

These words are more than a song title from The Clash, they are also words that enter the mind of any employee faced with a change in their terms of employment.  The answer, in most cases but not all cases, is “stay”.  The most recent case begins in a manner that sets the tone for the outcome:

You’ve been a valued employee for 18 years. One day you’re told that you position is being eliminated at the end of the month but that another job at a related company is available – the same kind of position with the same pay. You’re upset and not thinking clearly and you turn down the replacement job offer. You sue for wrongful dismissal. You eventually find other work but at a much lower position and salary. When the events are replayed at trial and are viewed more objectively, you realize that you should have taken the offered position, that in failing to do so you didn’t mitigate your losses and your action for wrongful dismissal will probably not succeed.

You know the result without reading further – action dismissed.

In June, 2008, the owner of Downtown Toyota decided to streamline the management of the car dealership by reshuffling and eliminating some of the positions. He told the plaintiff “that his $80,000 job as Service Manager would end at the end of the month but he would be relocated to Downtown Suzuki, a recently acquired and related dealership, just a few blocks away, where he would continue as Parts and Service Manager with the same $80,000 compensation package”.  During discussions, the owner made clear to the plaintiff that his years of service would be recognized at Downtown Suzuki.  The plaintiff declined the offer and sued.

The plaintiff became re-employed in a lower paying position several months later.

The employer argued that the plaintiff had failed to mitigate by accepting the position with Suzuki.  The Court agreed and noted:

Whether it was a wrongful or constructive dismissal, [the plaintiff] was required to mitigate his damages while looking for another job. The obligation to mitigate may well include taking the job that is being offered by the dismissing employer.

There was a dispute in the evidence about whether the employer would recognize the plaintiff’s years of service if he moved to the new dealership. The plaintiff said the employer indicated it would not, whereas the employer’s evidence was that it would.  In the end the judge accepted the employer’s evidence.  That being said, even if the judge had not accepted the employer’s evidence, and this part is important in a number of contexts, the Court would have found in favour of the employer.  It noted:

In any event, my preference as to who said what about the seniority issue is not determinative. Even if I had accepted [the plaintiff's] evidence that he would have to “start fresh” and would end up losing his 18 years of service, I would still have come to the same conclusion. [The plaintiff's] refusal of the replacement job offer at Downtown Suzuki – same position, same pay, no intangible reason not to take it – was objectively unreasonable. Even if the replacement job had only lasted nine months (before the Suzuki dealership was closed) that was still nine months of reasonably required mitigation. As it turned out, the Suzuki location remained open for 22 months before it was transformed into a Hyundai dealership.

While it is possible for an employee to reject a transfer or change in terms of employment, quit and sue for constructive dismissal, these circumstances would seem to be rare indeed.  It’s a tough call.  Leading cases are Evans v. Teamsters Local Union No. 31 and Russo v. Kerr (argued by KC Wysynski ).