Mind How You Fire Employees: Recent Decision Awards Employee $55,000 in Damages Due to Employer Conduct at the Time of Termination.

March 1, 2023

“Mind How You Fire Employees: Recent Decision Awards Employee $55,000 in Damages Due to Employer Conduct at the Time of Termination.”

In Pohl v. Hudson’s Bay Company 2022 ONSC 5230, the plaintiff, a 53-year-old sales manager, was terminated without cause after 28 years of service. At the time of termination, the plaintiff was offered amongst other things, 40 weeks of notice, continued employment in a demoted capacity, a requirement that the plaintiff relinquish his common law entitlement to reasonable notice, a reduction in pay and a possible reduction in hours with no guarantee of minimum hours. The plaintiff declined to accept the offer and sued for wrongful dismissal.

The Ontario Superior Court of Justice found, amongst other things, that the plaintiff was entitled to 24 months of reasonable notice. In addition, the court awarded the plaintiff $45,000 in aggravated damages for the employer’s bad faith in the manner of dismissal based the following:

  • The unduly insensitive treatment by the employer by walking the plaintiff out the door after the termination of his employment, where the plaintiff had not committed any misconduct.
  • The misleading offer of continued employment in a lower position, with less pay, on terms that extinguished his common law notice entitlements or any certainty of hours, without offering any corresponding compensation or benefit in lieu. 
  • The employer violated the Employment Standards Act (ESA) by payment of the plaintiff’s statutory notice as a salary continuance, rather than as a lump sum as required by the ESA.
  • The employer did not issue the plaintiff’s record of employment within the time required by the Employment Insurance Act (EIA).

The court found that the employers actions resulted in a violation of the employer’s duty of good faith and fair dealing at the time of termination, and that it was within the reasonable contemplation of the employer that its conduct would cause the plaintiff mental distress. In addition, the court awarded the plaintiff $10,000 in punitive damages for the employer’s violation of the ESA and the EIA.

Key Takeaways:

  • Employers must meet their duty of good faith and fair dealing when terminating employees, including being mindful of the employee’s particular vulnerability in the circumstances and to not mislead. 
  • Any material changes to employment terms, without adequate consideration (exchange of value), gives rise to risk that employee will sue for constructive dismissal and termination pay, including aggravated damages, if done in an unfair or misleading manner.
  • When terminating employees, maintain compliance with applicable statutory requirements by ensuring that:
    • the minimum statutory termination pay in lieu of notice is paid in lump sum (not as salary continuation) no later than seven days after the employment ends and the day that would have been the employee’s next pay day.  
    • electronic ROE’s are issued within five calendar days after the end of the pay period in which an employee’s interruption of earnings occurs. Paper ROE’s are to be issued within 5 calendar days after the first day of interruption of earnings.