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How to Save $100,000

By March 19, 2019April 29th, 2024Employment Law

New Case where Employer saved $100,000

A new case called Gent vs. Strone was just released where an employer saved more than $100,000 in wrongful dismissal damages by offering to recall a long-time employee early on in the reasonable notice period following a constructive dismissal.

About the Employment Relationship

The Employee (Mr. David Gent) had worked for the Employer (Strone Inc.) for 23 years when he was temporarily laid off due to a lack of work. Two weeks after the layoff, a lawyer for the employee wrote to the Employer claiming the temporary layoff was actually a constructive dismissal in disguise. The Employer said there was a possibility he would be recalled to work, so it was no dismissal.

The employee’s lawyer immediately replied (remember, this is only after 2 weeks, not even 13 weeks like the ESA says) and said there was no possible way the employee could return to work because the Employee didn’t trust the Employer, the relationship had broken down, and that he would be suing.

Another two weeks later, the Employer actually recalled the Employee back to active employment. In the recall letter, the Employer assured the Employee that he was being recalled to perform work consistent with past work; and assured that it considered him to be a valued employee and that it would treat him normally with no reprisals or hard feelings.

Two days passed and the Employer hears nothing from the Employee.  The Employer follows up and asks the Employee’s lawyer whether he would go back to work. The employee’s counsel replied that he would not and followed up with his lawsuit against his former employer.

The Lawsuit

The court decided that the Employer had, in fact, constructively dismissed the Employee because there was nothing in the employment contract that permitted the Employer to lay-off.

Had everything gone right for the Employee, he would have received 18 months of pay.  But it didn’t work out that way.

The court also decided that the employee had failed to mitigate his wrongful dismissal damages by refusing to return to work when the Employer recalled him. As a result, the employee was only entitled to compensation for the time between the lay-off and recall — 3.5 weeks!

The Court did not look kindly on the Employee’s decision to refuse to go back to his job, regardless of the circumstances. While the Employee had already started his lawsuit by the time he was recalled, the Court said it still would have been reasonable for the Employee to at least consider the offer of the return to work.  There was no evidence of such a consideration. The Court only heard that the long-standing employment relationship had been harmonious and amicable before the layoff, the Employee had no issues with his superior, he worked in a good workplace, and he enjoyed working there.

Be Careful With Lay-Offs, But Get Advice

This decision highlights the importance of getting appropriate and timely legal advice when it was needed the most. Both the Employer and Employee had lawyers from the very beginning (but only one lawyer was right).  In this case, the Employer made the right call to re-call the Employee back to work before the temporary lay-off turned into a permanent layoff.

The case also highlights the benefit of avoiding a complete breakdown in an employment relationship once an employee has asserted that he or she has been constructively dismissed.

I find it a bit troublesome that the Employee and his lawyer simply refused to even consider going back into work. Maybe he could have tried going back in, testing it out, seeing if everything would have been ok.  Been reasonable!  Instead, he took a stubborn litigation-focused approach.  For all that effort, headache, legal fees… the Employee received 3.5 weeks of pay.  Not the 18 month payout he was hoping for (we don’t yet know how much legal fees the winner will get, but I will update the post if I find out).

By offering to recall the Employee early on in the 18-month reasonable notice period, the Employer avoided paying $100,000 to the former Employee.  Had the Employer been just as stubborn as the Employee, the outcome of the case likely would have been the opposite.

If you find yourself in a tough spot with an employee lay-off or constructive dismissal, reach out to the DMC LLP and we can guide you through the process of managing your team.

The Content of this post is provided for informational purposes only. It is not intended to be legal, financial, tax, or other professional advice of any kind. You are advised to contact DMC (or other counsel) to seek specific legal advice concerning your individual situation.