Failure to Accept Offer of Reemployment By Acquiring Company Before Termination is Not a Failure to Mitigate:

In Giduturi v LG Electronics Canada (no CANLI citation yet) Justice Dinnen had a situation of a 49 year old  warehouse worker of 13 years service whose employer   (  LG ) announced that it ws  outsourcing its warehousing operation in 8 weeks time  to a third party company ( Pantos) who would be offering employment on the same terms and would respect their LG seniority.

However Pantos did not do so in that they offered inferior compensation and purported to say that the employment was ” at will” .

The Plaintiff refused the Pantos offer. Pantos then filled the job. Only after the Plaintiff’s refusal did LG terminate the Plaintiff. 

The Court found that the Plaintiff’s failure to accept the Pantos offer was not a failure to mitigate for two reasons:

  1. It was not comparable in terms of the compensation.
  2. Citing the Court of Appeal in Dussault v. Imperial Oil Limited 2018 ONSC 1168. where it held “ it is fatal to an employer’s argument that an employee failed to mitigate his damages by working for his old employer where the offer of alternative employment was made before the termination: “

The Plaintiff was awarded 12 months notice.

My Comments:

In many situations where a company is sold, it is common for the purchasing  employer to offer employment to the employees of the seller before closing and before the seller gives notice of termination. The seller does not wish to give notice of termination as this may trigger the obligation to pay ESA termination and severance pay. If the purchaser does employ the employee then the seller is likely off the hook for any termination obligations.

One  way to avoid this situation is for the purchaser to agree that it will keep all its offers of employment open for acceptance to some point after the closing of the transaction. However the purchaser may be unwilling to do so because this would likely create an unacceptable level of uncertainty in so far as staffing is concerned.

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