When a company eliminates one position and offers the employee a substantially similar position, the employee refuses the offer at their peril – unless there are extenuating circumstances, says Toronto employment lawyer Doug MacLeod.
The key question from a legal perspective is whether the new job is comparable to the old one, says MacLeod, principal of MacLeod Law Firm.
In 1989, the Court of Appeal set out a four part test to determine whether a job is comparable. If the working environment is acrimonious and the employee ends up in a less senior role, courts have found that the worker need not accept the reassignment.
“This situation happens quite a bit during restructuring,” MacLeod tells AdvocateDaily.com.
But the same issue can arise after an employee has been terminated and the employee’s lawyer has sent a demand letter seeking substantial wrongful dismissal damages, he says. At this point, the employer, who may not have sought legal advice before terminating the worker, realizes it may be on the hook for substantial wrongful dismissal damages and wants to limit these damages.
One option is to offer the employee their job back or a different job. According to MacLeod, the employer may say something like, “We’ve reconsidered your termination and want you back,” or “We can’t give you your job back, because it doesn’t exist anymore, but here’s another job, which is comparable.”
“The issue to be resolved is whether the offered job is comparable,” MacLeod says. “Are we looking at a demotion here, are we looking at a situation where the person has to report to a former subordinate? Has the person been cut out of management meetings as part of the new job?”
MacLeod says that one of the most important factors that is taken into account is the personal relations between the employee and his immediate supervisor or management. If it is acrimonious or uncomfortable for the worker, some judges have concluded the employee doesn’t have to accept it.
“If you are offered a job at the same pay, with the same hours, but it’s a demotion, where you’re reporting to a former subordinate and the relationships are very acrimonious, some judges conclude the employee is not required to accept the offer,” he says.
But not accepting the offer could be a gamble, because what the employee may see as being acrimonious may not necessarily be found to be so by the courts. The line between an acceptable work environment and one that crosses into the realm of being unacceptable is not crystal clear, MacLeod says.
If the employee refuses the offer and demands a severance and a judge finds the worker should have accepted the offered job, the employee risks receiving no damages and being out of work, he says.
“It’s all or nothing situation” says MacLeod. “If the employee is not required to accept the job, then they get pay in lieu of notice of termination; if, however, a judge concludes she should have accepted the offer and she didn’t then she gets no damages.”