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Duty to mitigate damages resulting from a wrongful dismissal may well include accepting employment at a different establishment


Co-authored by Mathias Link and Andrew Carricato

The duty on an employee to mitigate one’s damages is not limited to simply making reasonable efforts to find another job during the notice period. In Ghanny v. 498326 Ontario Limited[1], the Ontario Superior Court of Justice rejected both of the plaintiff’s arguments that he should not have to accept alternate employment with the same employer at a different establishment because a) he might not be credited with his prior years of service, and b) there was a risk that the new job at the new establishment would end before the expiry of the reasonable notice period.

Let’s consider what occurred.  The plaintiff, Aleem Ghanny, was a valued employee of 18 years, earning $80,000 annually as a Service Manager for Downtown Toyota in Toronto. In June 2008, the owner, Shahnin Alizadeh, decided to streamline management of the dealership by reshuffling and eliminating certain positions, including Mr. Ghanny’s position.  Since he still required Mr. Ghanny’s skills and experience, the owner offered to relocate him to the position of Parts and Service Manager at Downtown Suzuki, a recently acquired and related dealership that Mr. Alizadeh owned and operated just a few blocks away. Despite the fact that the position offered the same compensation as was provided to him at Downtown Toyota, Mr. Ghanny rejected the position and commenced an action for wrongful dismissal one month after the date of termination. The Suzuki dealership did eventually close in 2010, however, all Suzuki employees who were interested were subsequently offered employment at two other dealerships owned by Mr. Alizadeh.

The case turned on the meeting in June 2008, when Mr. Alizadeh advised the plaintiff that his years of service at Downtown Toyota would be transferred to Suzuki and that no matter what happened to the Suzuki dealership, the plaintiff’s job would not be at risk.

The court had no difficulty in finding that Mr. Ghanny failed to mitigate his damages by turning down the position at Downtown Suzuki.

It is settled law in Canada that “[i]n some circumstances it will be necessary for a dismissed employee to mitigate his or her damages by returning to work for the same employer […].  [R]equiring an employee to mitigate by taking temporary work with the dismissing employer is consistent with the notion that damages are means to compensate for lack of notice, and not to penalize the employer for the dismissal itself.” [2]

“Where notice is not given, the employer is required to pay damages in lieu of notice, but that requirement is subject to the employee making a reasonable effort to mitigate the damages by seeking an alternate source of income.”[3]

Where the employer offers the employee a chance to mitigate their damages by returning to work for them, the central question becomes whether a reasonable person would accept such an opportunity.

As noted by the Court of Appeal in Mifsud v. MacMillan Bathurst Inc.[4], a reasonable person should be expected to accept a replacement job offered by the dismissing employer where the pay is the same, the working conditions are not hostile, embarrassing or humiliating in any way, where the work is not demeaning nor where the personal relationships are acrimonious.

This analysis was approved by the Supreme Court of Canada in Evans and it was further explained that the reasonableness of an employee’s decision not to mitigate must be assessed on an objective standard.[5]

Therefore, when objectively viewed, it is not surprising that the court held that Mr. Ghanny’s refusal to accept the Downtown Suzuki position was unreasonable. The employer had offered Mr. Ghanny the same kind of job, with the same pay and offered to recognize his prior service with Downtown Toyota.  The relationship between Mr. Ghanny and Mr. Alizadeh was not difficult or acrimonious, nor was the position offered to him demeaning. In fact, the employer wanted Mr. Ghanny to accept the position and valued his experience and his work. With respect to Mr. Ghanny’s concern that the Suzuki dealership would be closed before the end the notice period, the court held that the dealership did not close until well after the appropriate notice period. Furthermore, the absorption of all Suzuki employees into other dealerships owned by Mr. Alizadeh further strengthened the employer’s argument.

[1] 2012 ONSC 3276 (CanLII).

[2] Evans v. Teamsters Local 31, [2008] 1 S.C.R. 661 at para 28.

[3] Ibid., at para 28.

[4] (1989) 70 O.R. (2d) 701 (C.A.).

[5] Evanssupra note 1 at para 32.

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