Damages Reduced for Failure to Accept Recall After Improper Layoff

In Hooge v. Gillwood Remanufacturing Inc., the worker was informed that his employer was laying him off indefinitely due to a work shortage. The worker’s immediate supervisor said he did not think the company had any plans to recall him. The worker was provided with a reference letter and a Record of Employment, which indicated that the expected date of recall was “unknown”.

The worker sought legal advice. His lawyer sent the company a letter advising that the layoff was a fundamental breach of the employment relationship, and that the worker was seeking damages. Shortly thereafter, the company recalled the worker from layoff but he refused, believing that the company extended the recall offer as a way to avoid paying severance.

The Court found that the layoff amounted to a wrongful dismissal because the worker’s employment contract did not contemplate layoffs, and there was no evidence that the worker had accepted the layoff. Accordingly, the worker was entitled to reasonable notice or pay in lieu.

Interestingly, however, the Court held that even though the employer’s offer to re-employ was motivated by the company’s desire to minimize its own liability, the worker should have returned to work when he was recalled from layoff as it was unreasonable for him to decline. A failure to accept the recall offer constituted a failure to mitigate his losses.

This decision marks an interesting development in the law surrounding wrongful dismissal. It suggests that if an employer lays off a worker without providing sufficient notice, it may be able to mitigate its damages by extending an offer of re-employment, so long as it would still be reasonable for the worker to return. For example, it would be unreasonable to expect a worker to return to a poisoned working environment in which they would experience acrimony, mistreatment, or belittling. Otherwise, however, there appears to be an obligation on a laid off worker to accept a recall offer in order to mitigate wrongful dismissal damages.

A reprint courtesy of Mathews Dinsdale & Clark LLP. The information provided in this article is necessarily of a general nature and must not be regarded as legal advice. For more information about Mathews Dinsdale & Clark LLP, please visit mathewsdinsdale.com.

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