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In the recent decision, Chevalier v. Active Tire & Auto Centre Inc., the Court of Appeal for Ontario found that while a temporary Lay-off can amount to a constructive dismissal, declining an opportunity to return to work shortly after being laid off will result in a failure to mitigate unless the relationship between the parties was acrimonious and infused with animosity.

Earl Chevalier was employed by Active Tire for 33 years. He was constructively dismissed from his employment as the manger of automotive centre in Niagara Falls. Active Tire tried to lay-off Mr. Chevalier in the mistaken belief that it was entitled to do so due to the poor financial performance of the Niagara Falls facility.

Within two weeks of his lay-off, Mr. Chevalier commenced a lawsuit. A few days later, Active wrote to Mr. Chevalier calling him back to work at the Niagara Falls location, stating that they had acted under the mistaken belief that Active Tire could lay him off. He was recalled to work, at the same location, with the same responsibilities and duties, at the same salary and with the same benefits. In subsequent correspondence, Active Tire’s counsel confirmed Active Tire’s willingness to continue Mr. Chevalier’s employment and conveyed Active Tire’s apology for its mistake in laying him off.

Mr. Chevalier refused to return to work and instead continued with his lawsuit. At trial, the parties agreed that Mr. Chevalier had been constructively dismissed by the purported lay-off. The issue was whether Mr. Chevalier failed to mitigate his damages by refusing to resume his employment with Active Tire. Mr. Chevalier argued that management had engaged in conduct intended to “make his life miserable” and that he was not obliged to work “in an atmosphere of hostility, embarrassment or humiliation”.

Ultimately the trial judge dismissed claim and found a failure to mitigate by not accepting offer of re-employment, because:

  1. the conduct of Active Tire personnel was directed towards making Mr. Chevalier a more effective employee and improve his performance. It was not part of a campaign to cause him to leave the company;
  2. Mr. Chevalier was not subjected to demeaning, objectionable or retributory conduct by Active Tire representatives;
  3. the decision to lay-off Mr. Chevalier was made by Active Tire for economic reasons in the mistaken belief that lay-off options were available to it in the circumstances;
  4. many of the incidents of Mr. Chevalier complained of had become magnified and distorted in his mind over time; and
  5. the fact that Mr. Chevalier had already left the employ of Active Tire, and the fact that he had sued the company, when the offer of re-employment was made, while relevant, were not determinative of the reasonableness of his rejection of the offer of re-employment.

The Court of Appeal affirmed the trial judge’s decision. It was not “self-evident that the relationship between the parties was acrimonious and infused with animosity” as the argument was rebutted by evidence. Therefore, Mr. Chevalier’s refusal to return to work was unreasonable despite being constructively dismissed.

Lay-offs and constructive dismissal claims can be difficult to assess. It is prudent for employees and employers to seek a legal opinion regarding lay-offs and possible constructive dismissal claims before taking any steps.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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