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Constructively dismissed employee not obligated to accept an inferior position

April 30, 2015

Constructively dismissed employee was not obligated to accept an inferior position

The Ontario Court of Appeal has held that a constructively dismissed employee did not have to accept another position with the employer to mitigate his damages.


Dunstan Morgan was employed with Vitran Express Canada Inc. for 26 years, working as a dock supervisor for the last 24 years. In approximately 2004, the company began to raise performance issues with Morgan. Increasingly, the company began to target him and blame him for operational errors that in fact were common to all supervisors.

In May 2009, Morgan received a two-day suspension. In December 2009, the company presented him with a “Corrective Action Plan,” which included a “Performance Summary” document purporting to record the errors attributable to Morgan over a five year period, many of which had never previously been brought to his attention. In conjunction with the Corrective Action Plan, Morgan was shadowed by the shift manager, but was not provided with any feedback on how he might improve his performance.

When Morgan injured himself at work, his superiors claimed his injury was “bogus”. The company then required Morgan to undergo personality testing which, according to the employer, determined that he was unsuited for the job he had been performing for 24 years.

The company later announced Morgan would be transferred to a newly created position at the same salary, but which involved significantly less responsibility. Morgan refused to take the new position. He sued for wrongful dismissal, claiming that he had been constructively dismissed. The employer claimed that he had not been dismissed. Alternatively, the employer claimed that, even if Morgan had been wrongfully dismissed, he was obligated to accept the new position in order to mitigate (i.e. limit) his damages.

The Superior Court’s decision

The Ontario Superior Court of Justice held that Morgan had been constructively dismissed.

The Court found that the employer’s Corrective Action Plan was vaguely worded and failed to give Morgan any specific recommendations for how to meet the company’s expectations. It concluded that the employer’s corrective efforts were “doomed to failure”. It also found that Morgan had been “targeted” by his superiors who were looking to find fault with his performance for reasons that were not clear. The Court further held that the employer’s allegation that Morgan’s injury was bogus was unwarranted, and that  Morgan’s supervisors had been unprofessional in their dealings with him. In addition, contrary to the employer’s claim, the Court held that there was no indication in the personality test that Morgan was unsuited to the dock supervisor position.

The Court concluded that there had been a fundamental change to Morgan’s employment contract when he was transferred into the newly created position. She found that the change to his job after working in a supervisory capacity for many years was clearly demeaning, and that a reasonable person who had been treated in the manner Morgan had been treated by Vitran would not have accepted the job in the circumstances. Morgan had been constructively dismissed.

Turning to the question of damages owed by the employer to Morgan, the Court was required to consider whether Morgan had mitigated his damages. It held this was not a case in which the employee should have continued to work for the employer to limit his damages. She distinguished the decision of the Ontario Court of Appeal in Chevalier v. Active Tire & Auto Centre Inc. on the basis that, in that case, the employer was found to have been well-motivated and the plaintiff had not been subject to any demeaning or objectionable conduct. In this case, on the other hand, the job being offered was of less importance than the original position and Morgan would have suffered a loss of dignity in the eyes of the dock workers he used to supervise. Moreover, the evidence demonstrated that the employer had not acted in good faith. Indeed, as noted, the employer had singled Morgan out for negative treatment, was inappropriate in its communications with him, and failed to provide him with meaningful guidance about how to improve.

After reviewing the usual factors relied on by the courts to determine an appropriate period of notice, Justice Wilson held that Morgan was owed reasonable notice of 18 months, plus pre-judgment interest.

Court of Appeal dismisses employer’s appeal

The employer appealed the decision, arguing that the Superior Court erred in finding that the terms of Morgan’s employment had been altered in a substantial way. The Court made short shrift of this argument. It held that the Superior Court’s finding that the new position of freight analyst was “a job that had been created checking on 2 part-time workers, a position of less importance and prestige with very little supervisory function and little opportunity to make decisions and exercise discretion” was supported on the evidence and by itself justified a conclusion that the essential terms of Morgan’s job had been altered in a substantial way.

The employer also argued that the Superior Court erred by taking into account evidence about its treatment of Morgan before he was transferred to the freight analyst position. The Court of Appeal rejected this argument, holding that the trial judge was entitled to consider whether the employer’s conduct would lead a reasonable person to conclude that it no longer intended to be bound by the terms of the contract.

On the issue of mitigation of damages, the Court of Appeal rejected the employer’s argument that the Superior Court erred in holding that Morgan was not required, in the circumstances of this case, to mitigate his damages by taking the new job. The trial judge’s findings that the work environment at Vitran was unfriendly, that the position Morgan had been offered was of lesser importance than his supervisory job, that Morgan would have suffered a loss of dignity in accepting that position, that Morgan had been treated in an unacceptable manner in the period leading up to his constructive dismissal, and that Morgan’s supervisors criticized him no matter what he did were supported by the evidence and supported her conclusion that Morgan’s decision not to return to work was reasonable.


Christine Davies

Practice Areas

Civil Litigation, Employment Law