In a recent British Columbia case our courts considered whether an employer would be excused from paying severance pay to a terminated employee by offering to rehire her. The employee was terminated on her return from a disability leave. She retained a lawyer who sent a demand letter to her employer seeking severance pay.
The employer responded with an offer to rehire the employee.
Dismissed employees are under an obligation to seek and take other comparable employment to reduce the loss of income caused by a termination of employment. If the dismissed employee does not act reasonably in seeking and accepting alternate employment, damages might be denied or reduced by the court hearing the case. This obligation is referred to as the “duty to mitigate.”
The employee in this case refused to come back to work and instead sued her former employer seeking to recover severance pay. The employer defended the case on the basis that it was unreasonable for the employee not to have come back to work – it was alleged that she failed to mitigate her damages.
The dental technician in question in the case argued that the offer did not compensate her for the time between her termination and the date of the offer. She also said that she had lost trust in the employer because he had spoken poorly of her to another employee and had taped conversations with her.
Had the employer in this case offered to pay all of the wages lost by the employee after the termination and not engaged in demeaning conduct towards the employee the offer of reinstatement might have resulted in a denial of damages to the employee.
The bottom line is that where an employer makes a mistake by terminating an employee, provided the employer acts in good faith, it is possible to avoid a wrongful dismissal case by making up the employee’s lost wages and offering reinstatement – “making the employee whole.” If, however, the offer of reemployment is made in circumstances where the trusting relationship between the parties has been broken, the offer to make the employee whole will not be enough.
