Labour Studies Index

Updated: 2022-05-16

Aftermath of the SCC's Potter Decision: The Interaction between Constructive Dismissal and Mitigation of Damages Still Requires Attention

Document type Article
Author VanBuskirk, Kelly
Journal Canadian Labour and Employment Law Journal
Volume 20
Date 2017
Pages 43-68


This paper explores ongoing tensions in the Canadian common law of employment between two key principles: the obligation of a constructively dis- missed employee in some circumstances to remain in the employment where it is reasonable to do so in order to mitigate damages, and the possibility that the employee's decision to advance a legal claim alleging constructive dismissal may, in and of itself be treated as a repudiation of the contract so as to disentitle the employee from damages. As explained by the author, this tension reflects the competing influences on employment law of different theories of contract - the classical, the neoclassical, and the relational - and is further complicated by the friction in the case law between the "elective" and the "automatic" theories of contract termination in employment, i.e. can the agreement be terminated only on the election of the innocent party or does any repudiatory breach auto- matically result in the agreement's termination? As a practical matter, these unresolved conflicts make it difficult to predict the outcome of a particular case, and force employees and their legal counsel to make an unnecessarily convo- luted series of decisions in attempting to determine the appropriate course of action. The author argues that many of these issues would be greatly simplified if the courts embraced relational contract law theory in the constructive dis- missal context. This would enable employees to "stand and sue," that is, obtain a determination of a claim without having to resign and without risking loss of the employment in the event that the claim was ultimately unsuccessful.