Ontario Divisional Court reaffirms that employees may be required to accept alternative job offer to mitigate damages

October 29, 2013

The Ontario Divisional Court has recently upheld the trial judgment in Ghanny v. 498326 Ontario Limited (Ghanny), a case we discussed previously here.  In Ghanny, Justice Belobaba held that a former employee’s wrongful dismissal action could not succeed because he failed to mitigate his losses after rejecting another position offered to him by his employer.

After being informed of his pending termination as a Service Manager at a Toyota dealership, the appellant (Mr. Ghanny) was offered another management position with the same salary at another nearby dealership.  Mr. Ghanny, however, ultimately rejected such offer because he was of the view that his years of service would not be recognized by the new dealership and that the financial viability of such dealership was uncertain.  This decision was made by Mr. Ghanny despite assurances to the contrary.  At trial, Justice Belobaba held that Mr. Ghanny could have mitigated his damages by accepting the proposed new position, and thus dismissed his action.

 On appeal, the Divisional Court ultimately agreed with Justice Belobaba.  In particular, it held that Justice Belobaba applied the correct legal test for mitigation and that there was sufficient evidence to support his findings.  In doing so, the Court’s decision serves as a recent confirmation that an employee’s refusal of a reasonable offer of employment can limit, and in some cases entirely eliminate, a claim for wrongful dismissal damages. 

Interestingly, the Divisional Court noted that had Mr. Ghanny accepted the new position, he would not have been precluded from subsequently making a claim for damages as against the Toyota dealership that terminated him if matters had not worked out at the new dealership.  This weakened any argument Mr. Ghanny had as to why his refusal of the offered position was reasonable.  In this sense, an employee hesitant to accept alternative offered employment out of a concern that their continued employment in the new role is uncertain may still be required to do so as a mitigation measure while maintaining the right to bring an action against their initial employer if their damages are not fully mitigated through the new employment.

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