Executive summary: Key legal and evidentiary issues

• Alberta constructively dismissed Derrick Gugulyn by unilaterally transferring him from Director of Financial Planning to Director of Compliance without his consent.

• Reasonableness of refusing re-employment was assessed under the Evans v Teamsters framework, considering workplace hostility, strained relationships, and breach of trust.

• The trial judge found the work environment would have been "intolerable" due to acrimony with the supervisor and Alberta's manner of implementing the transfer.

• Alberta bore the burden of proving Gugulyn's failure to mitigate, arguing he should have accepted the Compliance Director role or found alternative work within nine months.

• Gugulyn cross-appealed, contending he took reasonable steps and should not have had his 23-month damages award reduced by the trial judge's 17-month mitigation finding.

• Both the appeal and cross-appeal were dismissed, with the Court of Appeal finding no reviewable error in the trial judge's analysis.

The facts of the case

Derrick Gugulyn was a long-serving employee of the Government of Alberta, having worked for the province for over 23 years. His most recent role was as the Director of Financial Planning. In early 2021, following a spate of departures within his department, Gugulyn's supervisor advised him that he would be transferred to a different role — Director of Compliance. Gugulyn made it clear that he was unwilling to accept the Director of Compliance position because it required education and experience he did not have.

Despite his objections, on March 2, 2021, Gugulyn's supervisor emailed department employees to announce that Gugulyn had accepted the new position. Gugulyn was upset and reiterated his unwillingness to accept the transfer. He retained legal counsel, who informed Alberta on March 16, 2021, that its conduct constituted constructive dismissal and Gugulyn did not intend to continue his employment. Alberta asked him to reconsider. On March 24, 2021, it followed up with a formal offer of the Director of Compliance position. Gugulyn did not accept the offer and did not return to work.

The trial decision

At trial, Justice D.J. Kiss concluded that Alberta had constructively dismissed Gugulyn — a finding that was not challenged on appeal. The trial judge determined that Gugulyn was entitled to 23 months' notice and, in lieu of notice, the salary and benefits he would have earned during that 23-month period. However, the trial judge also found that Gugulyn did not mitigate his loss by failing to take reasonable steps to find suitable new employment. The court concluded that had he done so, he would have found a comparable position with a different branch of the Government of Alberta within 17 months of his constructive dismissal.

The appeal and cross-appeal on mitigation

Alberta appealed the trial judge's mitigation finding, arguing that Gugulyn completely failed to mitigate his loss because a reasonable person in his situation would have accepted Alberta's offer of re-employment as Compliance Director made on March 24, 2021. The leading authority on when it is reasonable for a dismissed employee to return to work for the same employer is Evans v Teamsters Local Union No 31, 2008 SCC 20, which sets out an objective and multi-factored assessment. Among the relevant factors are whether the salary is the same, the working conditions are not substantially different, the employee has commenced litigation, the offer was made before or after the employee left, and critically, whether the employee would be returning to work in an atmosphere that is hostile, embarrassing, or humiliating.

Gugulyn cross-appealed, arguing that he did take reasonable steps to find new employment and that the evidence did not support a finding that he would have obtained a suitable alternative within the 23-month notice period. He contended that the trial judge should not have reduced his damages award at all.

The Court of Appeal's analysis and ruling

The Court of Appeal of Alberta, comprising Acting Chief Justice Pentelechuk, Justice Slatter, and Justice Antonio, upheld the trial judge's findings on all fronts. On the question of whether Gugulyn should have accepted the re-employment offer, the Court agreed with the trial judge's conclusion that a reasonable person would not have accepted the March 24 offer because the work environment would have been "intolerable." Three core findings supported this conclusion: Gugulyn had already informed Alberta that he intended to seek damages for constructive dismissal; the supervisor in the Director of Compliance position would have been the same person and their relationship was strained to the point of being "acrimonious"; and the way Alberta implemented the transfer undermined the trust between Alberta and its employee. The Court rejected Alberta's argument that this analysis reflected an erroneously "subjective" approach to the issue, finding instead that it simply reflected the trial judge's credibility findings, not an error of law.

On the 17-month mitigation finding, neither Alberta nor Gugulyn showed that the trial judge's findings were clearly wrong. Alberta had argued Gugulyn would have secured alternative employment within nine months, while Gugulyn argued no reduction was warranted at all. The Court found it was open to the trial judge to draw the factual inference that Gugulyn would have been successful within 17 months given his qualifications and skills and the job descriptions in the postings that were put in evidence. The Court also held that Alberta was not required to call recruitment experts to prove that Gugulyn would have obtained an advertised position during the 23-month notice period. Ultimately, both the appeal and the cross-appeal were dismissed, preserving the trial judge's award of damages for the 23-month notice period as reduced to 17 months on account of the failure to mitigate. No exact monetary amount was specified in the decision.