Speaker's Corner: Beggs puts new spin on duty to mitigate under Evans

The Supreme Court of Canada decision in Evans v. Teamsters Local Union No. 31 has been widely regarded as confirming the employee’s duty to mitigate damages by continuing in employment if requested by the employer.

Many employment lawyers, especially those acting for the company, attempt to rely on this decision to reject employees’ claims for severance packages when they reject comparable alternate employment with the employer.

While this may be true, it’s not as easy as it sounds, as the B.C. Court of Appeal confirmed in its recent decision in Beggs v. Westport Foods Ltd.

The employee in the case, Jantsje Beggs, had worked at a grocery store in various positions for about 10 years. After a fire destroyed Beggs’ home, she advised her employer she wouldn’t be coming into work the following day and didn’t know when she’d be returning.

When the employer didn’t hear from her again during the week following the fire, it attempted to contact her by phone on two occasions but was unsuccessful.

The employer didn’t attempt to contact her again, nor did Beggs try to do so either. Having not heard from Beggs, the employer, assuming she had abandoned her job, issued a record of employment indicating she had quit.

Beggs, however, interpreted the document as a dismissal and retained counsel who sent a letter to the employer advising that she hadn’t quit but was absent from work for health reasons such as insomnia, depression, and anxiety.

Her lawyer also took the position that the employer had terminated her and demanded compensation because of the alleged “bad faith manner of termination.”

In a letter dated Aug. 17, 2009, the employer’s counsel denied the accusations and maintained the position that the employee had quit even after discovering that she couldn’t return to work for health reasons.

But the lawyer later recanted in a further letter dated Aug. 28, 2009, and indicated Beggs was welcome to return to work. Beggs immediately initiated the court action and later rejected the offer to return to work.

Beggs admitted at trial that, prior to retaining counsel, she didn’t advise anyone at the company that she was unable to return to work for health reasons. Nonetheless, the court found there to be a dismissal. It further held that Beggs had no obligation to return to work given that the written offer on Aug. 28 wasn’t clear and unequivocal.

In the court’s view, the employer had acted in bad faith and its two attempts to contact the employee were “minimal and inadequate.”

The Court of Appeal agreed that the company had dismissed the employee but said the trial judge should have provided a proper analysis in support of the conclusion.

Specifically, the trial judge had to identify the “clear and unequivocal” act by the employer that, viewed objectively, amounted to a clear dismissal. It found that the letter dated Aug. 17 by the employer’s counsel that maintained the position that Beggs had quit in the face of medical evidence that she was unable to work constituted the “unequivocal act of dismissal.”

According to the Court of Appeal, the parties or their lawyers should have spoken to each other directly about the reason for not returning to work rather than engage in a confrontational exchange of correspondence.

On the issue of mitigation, the appeal court cited the emphasis in Evans on a “multi-factored and contextual analysis” with the critical element being that the employee “not be obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation.”

It called for the use of an objective standard to evaluate whether a “reasonable person in the employee’s position would have accepted the employer’s offer” taking into account non-tangible elements such as work atmosphere, stigma, and loss of dignity as well as the nature and conditions of employment.

Based on Evans, the Court of Appeal found no error in the trial judge’s finding that the employer’s offer of re-employment was equivocal in its terms.

Specifically, the offer failed to state the terms of her re-employment, including the nature of her duties, the person who would be her supervisor, and her remuneration. In other words, the employer’s offer was “guarded and ambivalent,” a problem compounded by the unhelpful exchange of self-serving correspondence between counsel.

The court held that a reasonable person wouldn’t have been expected to accept the offer in these circumstances.

On the issue of compensatory damages, the Court of Appeal reversed the trial judge’s finding and found there to be no evidence that the employer had intentionally issued an incorrect record of employment and no proof of bad faith.

I believe this decision provides important guidance for counsel advising employers in this area of the law.
First, it’s a good idea to think twice before taking hardened positions on the issue of whether an employee has quit or abandoned employment.

This could come back to haunt the employer. In Beggs, the Court of Appeal encouraged a co-operative dialogue between the parties to determine the precise reason for the employee’s absence from work. Unfortunately, the Aug. 17 letter by the employer’s counsel proved fatal for the company’s case.

On the other hand, there may be circumstances in which the court will find the employee to have abandoned employment. As a result, it’s important to carefully analyze each case in that regard.

In Beggs, the court found that contacting the employee by phone on two occasions wasn’t sufficient in circumstances where a fire had destroyed her home, especially considering her health issues.

Second, if company counsel wants to rely on Evans and take the position that the employee has failed to mitigate the damages by rejecting the option of alternate employment, it would be helpful if the offer was genuine, made in good faith, and not taken for strategic purposes only.

Employers should include the precise position, job description, compensation summary, and reporting structure to enable the employee to make an informed decision on whether to return to work.

The court can then conduct an appropriate analysis about whether the employee should have accepted the offer of alternate employment given all of the circumstances.

Anything less may amount to an equivocal offer, as held in Beggs, with the result that the court won’t find the employee to have failed to mitigate under the Evans analysis.

Monty Verlint practises labour and employment law at Kuretzky Vassos Henderson LLP in Toronto.

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