Employers may want to reassess how they terminate their employees and the timeframe and manner through which they provide their employees with their termination-related entitlements. Pohl v Hudson’s Bay Company, 2022 ONSC 5230, a recent Ontario decision, demonstrates, amongst other things, what a court may award an employee whose dismissal was conducted by an employer in an unfair manner.

What Happened?

A 28-year full-time Hudson’s Bay Company Sales Manager in his 50s was terminated on a without-cause basis and immediately walked out the door. He earned an annual salary of $61,254 plus pension contributions and other benefits.

On termination, the employer offered the employee “continued employment” as a sales associate lead on the condition that he “voluntarily relinquish”/resign from his current job. In the associate lead role, the employee’s weekly hours would range from 28 to 40 with no guarantee for minimum hours, he would be paid $18.00 per hour, and the employer could terminate his employment at any time without cause by paying him only Employment Standards Act, 2000 (“ESA”) minimums.

The employee declined the offer and sued the employer for wrongful dismissal.

What Damages were Awarded?

On summary judgment, the Court awarded the employee the following:

  1. 24 months of notice;
  2. The cost of him replacing his benefits and employer’s contribution to his pension for 24 months;
  3. $45,000 in moral damages; and
  4. $10,000 in punitive damages for violation of the ESA.

Reasonable Notice

In determining the employee’s common law reasonable notice period, the Court considered factors such as the employee’s age and experience, the fact that he was terminated during the COVID-19 pandemic, his inability to mitigate his losses despite applying to 136 comparable positions, and his depressive symptoms contributing to his delay in applying to jobs until half a year after his termination.

Moral Damages

The Court found that an award of moral damages was justified as the employee experienced mental distress and hurt feelings beyond that which normally accompanies a dismissal as a result of the below

  1. The employer’s insensitive decision to walk the employee out the door on termination despite the fact that the employee committed no misconduct.
  2. Providing an offer of a sales associate job that was misleading. The offer (a) was designed to eliminate the employee’s termination entitlements while providing him with nothing substantial in exchange; (b) included a provision that purported to allow the employer to unilaterally change the employment contract without triggering a constructive dismissal; and (c) contained provisions to permit the employer to schedule the employee for zero shifts. The Court found that the above, which demonstrated the employer attempting to take advantage of a loyal, long-term employee during a vulnerable moment, was a breach of the duty of good faith and fair dealing.
  3. The employer’s deliberate violation of the ESA in failing to provide the employee with his wages in a lump sum in the required time period.
  4. The employer’s violation of the ESA in failing to provide the employee with a timely or accurate record of employment (“ROE”).

Punitive Damages

The employer’s failure to pay the employee’s wages pursuant to the ESA or on repeated demand by the employee’s counsel, as well as the employer’s failure to issue a timely or correct ROE, led the Court to award punitive damages against the employer.

Employer Takeaways

Employers often focus on a terminated employee’s notice entitlements; however, this decision highlights the equal importance of good faith and sensitivity during and after a termination and the significant ramifications of failing to meet these standards. Employers ought to recognize the distress, vulnerability, and humiliation often experienced by employees who are being terminated and respond in a delicate manner. Proper conduct by an employer is expected not only at the time of termination itself but also after termination, specifically with regard to fulfilling its ESA obligations within the required time frames and in the prescribed manner.