In Gugulyn v Alberta, 2026 ABCA 68, the Alberta Court of Appeal found an employee was not obligated to return to his employer, but had failed to mitigate damages on the basis of his qualifications and job postings supplied by the employer.
This case is important because it can be difficult to navigate an employee’s duty to mitigate and an employer’s obligation to prove the failure to mitigate, and this is guidance from our Court of Appeal.
Facts
The following were some of the pertinent facts summarized by the ABCA:
- Employee Derrick Gugulyn worked for the Government of Alberta (GOA) for 23 years, and worked in the position of Director of Financial Planning
- Gugulyn’s supervisor told him that he was going to be transferred to the position of Director of Compliance. Mr. Gugulyn said he was unwilling to accept the position because he didn’t have the right education and experience
- Despite Mr. Gugulyn’s protest, his supervisor emailed the department employees announcing that Mr. Gugulyn had accepted the position
- Gugulyn again expressed unwillingness to take the position
- Within a few weeks, Mr. Gugulyn obtained legal counsel who informed GOA that Mr. Gugulyn had been constructively dismissed and was not going to continue his employment
- GOA soon followed up with a formal offer for the position, which Mr. Gugulyn did not accept
- The Trial Judge found the employee had been constructively dismissed, was entitled to 23 months’ reasonable notice (severance), but had failed to mitigate his damages by failing to take reasonable steps to find suitable alternative employment at GOA
- The damages were reduced to 17 months for this failure to mitigate
- To prove this failure to mitigate, the GOA had provided evidence of the employee’s qualifications and job postings it found over the notice period. The Trial Judge had drawn a factual inference that, had the employee applied, he likely would have secured a position within 17 months
- GOA appealed, arguing total failure to mitigate by not accepting the Director of Compliance position. Gugulyn cross-appealed, arguing he had not failed to mitigate at all
Analysis / Conclusion
The ABCA cited the leading authority on the duty to mitigate by returning to the dismissing employer as being Evans v Teamsters Local Union No 31, 2008 SCC 20. The ABCA rejected the GOA’s mitigation appeal, highlighting the following aspects of the Evans test and its application to the facts of this case:
[6] […] A critical factor is whether the employee would be returning to work in an atmosphere that is hostile, embarrassing or humiliating: Evans at para 30. It is not reasonable to expect an employee to return to such an environment.
[7] The trial judge concluded that a reasonable person would not have accepted the March 24 offer because the work environment would be “intolerable”. That conclusion was based on three core findings. First, Derrick Gugulyn had already informed Alberta that he intended to seek damages for constructive dismissal. Second, the supervisor in the Director of Compliance position would have been the same person and their relationship was strained to the point of being “acrimonious”. Third, the way Alberta implemented the transfer undermined the trust between Alberta and its employee.
The GOA argued the Trial Judge erred by using a “subjective” approach to determining that the work environment was intolerable. The ABCA rejected this position, finding as follows:
[8] […] The finding simply reflects the trial judge’s credibility findings, not an error of law. There is no error in referring to the witness’s evidence to inform the decision as to the objective standard.
The ABCA also rejected the employee’s cross-appeal argument that he had not failed to mitigate damages at the 17 month mark. The ABCA acknowledged that the onus to prove failure to mitigate was on the employer, but had this to say about the required evidence:
[12] […] We do not accept that, in these circumstances, Alberta needed to call recruitment experts to prove that Derrick Gugulyn would have obtained an advertised position during the 23-month notice period. It was open to the trial judge to draw the factual inference that he would have been successful within 17 months given his qualifications and skills and the job descriptions in the postings that were put in evidence.
My Take
This case provides some helpful direction on the issue of failure to mitigate severance damages.
The case suggests that the following three things will tend to support a finding that returning to the same employer is not required for mitigation:
- Where the employee has informed the employer that they intend to seek constructive dismissal damages
- The existence of a strained relationship between the employee and the would-be supervisor, to the point that it is “acrimonious”
- Actions on the part of the employer that undermine the trust between the parties. For example, announcing that an employee has accepted a position when they have not actually done so.
I think employees and practitioners should take care not to assume that constructive dismissal will automatically prevent an obligation to return to work with the same employer. Several authoritative cases have made it clear that the obligation can still exist in constructive dismissal.
However, the case is still important for plaintiffs because constructive dismissal situations often have some or all of the hallmarks relied on by the Trial Judge in this case to find that the employee did not need to return to the GOA.
Gugulyn is likely a win for employees overall. Employers were not left empty-handed though. The ABCA’s findings that the employee’s qualifications and the job postings produced by GOA were enough to establish failure to mitigate is more favorable to employers than many prior mitigation decisions.
Bow River Law provides these regular legal blog articles for the purposes of legal news, education and research for the public and the legal profession. These articles should be considered general information and not legal advice. If you have a legal problem, you should speak to a lawyer directly.
