The Court of Appeal for British Columbia considered this question in Fredrickson v. Newtech Dental Laboratory Inc. 2015 BCCA 357 (CanLII). The trial judge found that the plaintiff failed to mitigate her damages when she did not accept an offer of re-employment from her employer. She appealed and the Court of Appeal allowed her appeal and in so doing clarified those circumstances in which a terminated employee is required to mitigate with the same employer.
After 8.5 years of employment, Leah Ann Fredrickson (“Fredrickson”) was terminated in July 2011. She held the position of registered dental technician assistant at a small office specializing in making crowns.
The court described what transpired as “a story of initial misunderstanding and miscommunication.” Fredrickson commenced a medical leave of absence in late April 2011. The employer disputed her entitlement to take the leave. She remained on leave and was cleared by her doctor to return to work on July 20, 2011 and she provided a note to that effect. She returned to work on July 20, 2011.
When she came in to work, Newtech informed Fredrickson that she was laid off for lack of work, issued her a record of employment and letter of reference. On September 9, 2011, through her lawyer, Fredrickson took the position that she had been terminated and was entitled to damages.
Newtech, through its lawyer, informed Fredrickson that she was to return to work on September 26, 2011. It also expressed the view that her failure to do so would constitute a failure to mitigate.
The employer eventually offered to pay Fredrickson her unpaid wages from July 20, 2011, until the date she was invited to return to work, September 23, 2011. According to the Court of Appeal:
On October 25 and November 4, 2011, Newtech again offered to re-employ Ms. Fredrickson at her same position, salary and benefits, and to pay her lost wages to the date of the first offer of re-employment, this being September 23, 2011. Yet again on April 19, 2012, Newtech offered to re-employ Ms. Fredrickson at her identical position, salary and benefits, and to pay her lost wages to the date of the initial offer.
Fredrickson declined these offers. Her position was that the owners’ “behaviour since the time he purported to lay her off had broken the employment relationship such that it was reasonable for her to decline to return to work at that small office.” Newtech, on the other hand, maintained that she had not been dismissed. However, according to the Court of Appeal, they seem to have acknowledged, during closing argument “that Ms. Fredrickson had been dismissed without cause and without reasonable notice” which made the sole issue whether she failed to mitigate her damages by returning to work as described above.
Put simply, the onus is on the employee to prove that she suffered damages and on the employer to prove that she failed to mitigate those damages.
Here the employer was not arguing that Fredrickson failed to mitigate by making reasonable efforts to find other employment with another employer. Newtech argued that she should have accepted their offer of re-employment and that, by failing to do so, she failed to mitigate her damages.
The leading case on this issue is Evans v. Teamsters Local Union No. 31 where Mr. Justice Bastarache of the Supreme Court of Canada stated:
 … Assuming there are no barriers to re-employment (potential barriers to be discussed below), requiring an employee to mitigate by taking temporary work with the dismissing employer is consistent with the notion that damages are meant to compensate for lack of notice, and not to penalize the employer for the dismissal itself.
 … Where the employer offers the employee a chance to mitigate damages by returning to work for him or her, the central issue is whether a reasonable person would accept such an opportunity. In 1989, the Ontario Court of Appeal held that a reasonable person should be expected to do so “[w]here the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships involved are not acrimonious” (Mifsud v. MacMillan Bathurst Inc.(1989), 1989 CanLII 260 (ON CA), 70 O.R. (2d) 701, at p. 710). In Cox, the British Columbia Court of Appeal held that other relevant factors include the history and nature of the employment, whether or not the employee has commenced litigation, and whether the offer of re-employment was made while the employee was still working for the employer or only after he or she had already left (paras. 12-18). In my view, the foregoing elements all underline the importance of a multi-factored and contextual analysis. The critical element is that an employee “not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation” (Farquhar, at p. 94), and it is that factor which must be at the forefront of the inquiry into what is reasonable. Thus, although an objective standard must be used to evaluate whether a reasonable person in the employee’s position would have accepted the employer’s offer (Reibl v. Hughes, 1980 CanLII 23 (SCC),  2 S.C.R. 880), it is extremely important that the non-tangible elements of the situation — including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment, the tangible elements — be included in the evaluation.
The Court of Appeal in Fredrickson concluded that the trial judge erred in two respects:
…. failing to accord significance to the incomplete nature of the offer; and failing to reflect the intangible element of mutual trust, commensurate with the nature of the employment, that flows like a current in the employment relationship.
On the second point, the Court had this to say:
I am of the view that the trial judge was clearly wrong in failing to reflect the mutuality of trust, in the context of this employment, inherent in the relationship between employer and employee. The pertinent question when mitigation is in issue was described by Justice Bastarache as whether “a reasonable person in the employee’s position would have accepted the employer’s offer”. To determine whether this is so, in my view requires a judge to consider the full nature of the employment relationship. This includes the obligations of good faith or fidelity on the part of both the employer and employee, consistent with the nature of the work and the workplace. Most frequently questions of good faith, fidelity and fair dealing are questions that arise in the context of allegations of cause for the employee’s dismissal. The integrity of the employment relationship goes further, however. Just as trust of an employee, in the circumstances of the employment, is an important aspect for the employer, so too trust of the employer is important.
In this case, the trust inherent in the employment relationship was eroded to the point where it was reasonable for Fredrickson to decline the offer of re-employment. The Court concluded that, unlike in Evans, “any chance of repairing the employment relationship was irretrievably lost”.
Things you might take away from this
This is yet another case to consider Evans and it provides a further example of the circumstances in which a terminated employee will be permitted to decline an offer of re-employment with the same employer. The fundamental question remains whether a reasonable person would accept such an opportunity having regard to all the surrounding circumstances. An employee faced with an offer of re-employment is put in a very difficult position. The employer should take every precaution to ensure that the return to work would not place the employee in an untenable position in a work environment that is or has become acrimonious and where trust is no longer present. Easy to say (sort of) tough to do at times.