In Richardson v New West Freightliner Inc (New West Truck Centres), 2025 ABCJ 141 (Neustaeter) the Alberta Court of Justice dismissed a wrongful termination lawsuit on the basis that the employee’s refusal to accept an offer of re-employment, after employment had ended, was a failure to mitigate damages.
This case is without doubt a win for employers and it has an interesting set of facts and analysis around the issue of failure to mitigate damages.
Facts
The following were some of the pertinent facts summarized by the Alberta Court of Justice:
- The plaintiff employee worked at the defendant employer, New West Truck Centres, as an unlicensed mechanic, for a few months short of 20 years
- 3 months before his last day of employment there, he received a termination letter that indicated he would have 3 months of working notice
- He worked through that period of working notice
- The employee was 73 years old at the date of his termination of employment
- Some facts from around the time of his termination of employment are as follows:
- His work schedule had been 4 days per week, 8 hours per day
- His role was to perform pre-delivery inspections on trucks, and to move truck axles
- The shop was slow in 2022 and 2023.
- In September, 2023, he asked his employer if might be possible for him to be laid off. The employer said it would get back to him on that
- The next month, he was given a termination letter stating that he was being provided “working notice of retirement” of four months
- He did not ask for more, but testified that he was made because he had not asked to be retired
- 3 days later, he was provided a different letter indicating he was being provided “working notice of your termination from New West Truck Centres”, and it indicated he would receive three months’ working notice, with his last day in mid-January 2024
- The employee posted his personal work tools for sale on Kijiji right after starting his working notice. The ad stated that he needed them until his last day of work
- On his last day of work, a purchaser came and picked up his tools. The employee’s evidence at trial was that he knew he would not need them because he wouldn’t be able to get a job as an unlicensed mechanic
- On his last day of work, a retirement party was held for the employee, where he was given some gifts. His evidence at trial was that everyone knew he was not really retiring
- Some time after his last day of work, the plaintiff retained a lawyer and the lawyer sent a letter to the (now former) employer expressing dissatisfaction with how things ended
- In mid-March, 2024, the defendant’s lawyer sent a letter to the plaintiff’s lawyer. It included an offer to re-employ the plaintiff on the same terms and conditions as previously, and that they would pay him the wages he had missed out on since termination of employment
- The employment offer did not include an end date, but did have a condition that the plaintiff was required to sign a release for any claim he may have had against the defendant
- The employer’s evidence was that it was a sincere job offer – their new VP of Human Resources had sat down with management after seeing the letter from the plaintiff employee’s letter, and had asked them if the plaintiff would be welcomed back if he returned. They said he would. The employer was aware the plaintiff had sold his tools prior to that, but their evidence was that this would not prevent him from returning
- The employee did not accept the job
- His explanation was that he was excited about the offer but he would have had to buy all his tools again, and he thought they were just going to look for a reason to fire him since there was no work
- The employee knew there was a tool and boot allowance, but he didn’t know how much it was and had never used it. He did not ask the employer if he would have to buy tools
- The Court found that the plaintiff’s reasons for not returning were just assumptions he made without asking the defendant
- The employee sued for wrongful dismissal. He was seeking severance (reasonable notice) and aggravated damages.
Analysis / Conclusion
The ACJ focused the decision almost entirely on the issue of whether he had failed to mitigate his severance damages by refusing to return to work with New West Truck Centres. The ACJ first summarized the law on the this branch of a “failure to mitigate” analysis:
[56] The Supreme Court of Canada reviewed the law in this area in Evans v Teamsters Local Union No. 31, 2008 SCC 20. Bastarache J, writing for the majority, found that Mr. Evans received an offer of re-employment after being terminated, that the terms of employment were the same as they had been previously, and that it was not objectively unreasonable for him to return to work to mitigate his damages. His appeal was dismissed
[57] The Court reviewed factors to be considered when there has been a termination and an offer of re-employment. At para 29, the Court states:
“… it is an accepted principle of employment law that employers are entitled (indeed encouraged) to give employees working notice and that, absent bad faith or other extenuating circumstances, they are not required to financially compensate an employee simply because they have terminated the employment contract. It is likewise appropriate to assume that in the absence of conditions rendering the return to work unreasonable, on an objective basis, an employee can be expected to mitigate damages by returning to work for the dismissing employer.”
[58] The Court continued at para 30:
“I do not mean to suggest with the above analysis that an employee should always be required to return to work for the dismissing employer and my qualification that this should only occur where there are no barriers to re- employment is significant… Where the employer offers the employee a chance to mitigate damages by returning to work for him or her, the central issue is whether a reasonable person would accept such an opportunity. In 1989, the Ontario Court of Appeal held that a reasonable person should be expected to do so “[w]here the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships involved are not acrimonious” (Mifsud v. MacMillan Bathurst Inc. (1989), 1989 CanLII 260 (ON CA), 70 O.R. (2d) 701, at p. 710)… The critical element is that an employee “not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation” (Farquhar, at p. 94), and it is that factor which must be at the forefront of the inquiry into what is reasonable. Thus, although an objective standard must be used to evaluate whether a reasonable person in the employee’s position would have accepted the employer’s offer (Reibl v. Hughes, 1980 CanLII 23 (SCC), [1980] 2 S.C.R. 880), it is extremely important that the non-tangible elements of the situation — including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment, the tangible elements — be included in the evaluation.
The ACJ noted that the plaintiff’s reasons for refusing the offer of re-employment were just assumptions. He assumed that he would need to buy tools and assumed the employer would look for a reason to terminate his employment. But he made these assumptions without calling the employer. There was also evidence that the employer was sincere in its offer to re-employ the plaintiff and that it intended to welcome him back.
The court noted that, apart from the potential re-employment, the defendant had not shown that the plaintiff could have found work at his age and with his experience.
The court went on to find that the plaintiff employee had failed to mitigate his damages by refusing to return to employment with his former employer:
[71] […] applying the standard outlined in Evans, I find that the terms of the re-employment offer were the same as the previous terms of employment, there was no atmosphere of hostility or animosity towards the Plaintiff, and I conclude that it was not objectively unreasonable for the Plaintiff to return to work for the Defendant to mitigate his damages.
As a result, the wrongful dismissal claim was unsuccessful and he did not receive any common law severance pay.
My Take
When I was reading this case, I thought it could potentially go either way on the mitigation of damages issue, but I did not expect it would happen the way it did.
I thought that if the ACJ was going to find a failure to mitigate, it would be on a somewhat novel basis. For instance, a court could perhaps find that there is a natural exception to the employer’s obligation to prove the employee would likely have secured work where the plaintiff takes an action that he knows will virtually guarantee he will not be able to secure work. The employee here sold his tools and then argued this is why he could not go back to work – perhaps implying he knew they are normally necessary for this kind of job. If it was in evidence that any mechanic would need their own tools in a typical shop job, then him selling those tools pretty much guaranteed that he would not be finding comparable work. I think this situation is quite different from the more common situation where an employee simply has not made an effort to find work. To be clear, the Judge did not explicitly say anything like that here, and I am not aware of a modern case where a court found failure to mitigate without requiring the employer to prove both parts of the test, which are: (1) employee did not make a reasonable effort to find work, and (2) if he had expended reasonable effort, he likely would have secured it.
The ACJ instead found failure to mitigate based on Evans and the refusal to return to work. This did surprise me. The application of Evans to the facts in this case was more employer-friendly than most of the caselaw on the subject, in my view anyway.
I think it would be very difficult for most people to return to work 2 months after their last day, and after their lawyer has already sent a letter to their former employer. I think for most people, this would be embarrassing or even humiliating. Most people would believe it’s a ploy of some kind, and in many cases I think they would be right. Even where not established in evidence that it was in fact a ploy, if a reasonable person in the position of the plaintiff would not trust the offer in the circumstances, I think there is an argument that rejecting the offer was objectively reasonable.
The employer in this case also wanted him to sign a release of the prior liability in order to return, which is an important detail because: (1) the case does not mention there being any obligation under the offer for the employer to employ him for any period of time, but the court does mention there is no listed end date – based on this, it appears to me to have been a regular, indefinite employment offer; and, (2) if he had signed any typical release and then been terminated from indefinite employment 2 weeks later (for example), all his previous accrued service (over 19 years) would no longer be taken into account for calculating that severance entitlement, because he had just signed a release of all prior liability. So for him to return, he would have had to trust that the employer who fired him 2 months prior would keep him employed for a reasonable period once when they had little liability to him.
To be perfectly clear, there are not enough details in this judgment about the offer and release to be sure what his legal rights would have been if he had taken the offer and signed the release. My comments above are based on what appears to have happened to me, reading between the lines so to speak.
I can say that it looks to me like the court was not impressed with this plaintiff’s behavior. The court did not think he had acted reasonably and did not really buy his story either. He had after all requested a lay-off prior to dismissal, and while that is not a request for a permanent termination of employment, it certainly seemed to harm the optics of his case. The court also obviously thought the employer had sincerely tried to right its wrong. Both of these things are helpful for a defendant seeking mercy in court.
I am interested to see what happens with this case if it ends up being appealed.
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