Do I Have to Accept a Demotion if My Job is Eliminated?

When an employee is terminated, the employee is required to minimize lost income by seeking alternative employment. What happens if your former employer offers to give you another job but at a reduced salary? Are you required to accept this demotion? This situation was recently considered by the Ontario Court of Appeal

The Case: Fillmore v. Hercules SLR Inc.

Due to a restructuring, the employer terminated an employee who had worked for about 19 years. The same day as his termination, the employer provided two offers that had to be accepted by a certain deadline:

1. a severance package where the employee would agree not to sue the employer; or
2. a new position but after six months, he would be paid 20% less.

The employee did not accept either offer by the deadline. The employer argued that the employee failed its duty to mitigate by not taking the new position that paid 20% less.

The motion judge decided that the employee did not have to accept a job with this kind of pay cut and the Court of Appeal agreed. In some cases, however, an employee may be required to accept a lesser position. When the salary offered is the same, the working conditions are not substantially different, the work is not demeaning, and the employer-employee relationship is not adverse, courts expect an employee to accept the new job to minimize lost income. The Court of Appeal stated that in this case, a reasonable person would not be expected to accept this new position to mitigate their damages.

Lessons for Employees:

 Terminated employees are required to mitigate their wrongful dismissal damages by seeking comparable employment.

1. Terminated employees may be required to accept a lessor position with the same employer to mitigate their damages in some cases.
2. Determining whether you are required to accept a lessor job with your employer is a difficult legal question, and you can obtain legal advice from an employment lawyer who is aware of the current state of the law on this issue.

If you would like to speak to a lawyer at MacLeod Law Firm, you can reach us at [email protected] or 647-204-8107.