Ana Kraljevic Law Firm

ak-4

Pohl v. Hudson’s Bay Company, 2022 ONSC 5230 – Employers who fail to comply with the ESA do so at their own peril

Background

The Plaintiff, Darren Pohl, started working at the Hudson’s Bay Company in 1992. After a history of positive work performance, he worked his way up to the position of a Sales Manager where he oversaw eight departments and had 30 sales associates reporting to him. On September 15, 2020, during the COVID-19 pandemic, HBC terminated Pohl’s employment without cause. Although there was no incident of misconduct, he was escorted outside the premises by his supervisor at the time of termination.

The Holding

Pohl brought an action against HBC for wrongful dismissal. The judge, Centa J., found that HBC wrongfully terminated Pohl’s employment and the appropriate notice period for the termination was 24 months. Pohl was also awarded damages equal to the replacement cost of his employment benefits as well as his employer’s contribution to his pension. Centa J. gave detailed reasons for awarding Pohl two significant heads of damages: an additional $45,000 on account of moral damages for the manner of termination (i.e. “Wallace damages”) and $10,000 in punitive damages because HBC failed to comply with the Employment Standards Act, 2000, S.O. 2000, c. 41 (“ESA”) by not paying out Pohl’s wages in a lump sum within seven days of termination and failing to provide him with his ROE within the timelines prescribed by the ESA.

HBC wrongfully terminated Mr. Pohl’s employment and he is entitled to a 24-month notice period

In this case, as in many cases with longer-term employees, Pohl did not have a written contract of employment. As such, there were no contractual terms that the employer could rely upon to rebut the common law presumption of reasonable notice. At common law, Pohl was entitled to significantly more notice than what is required under section 57(h) of the Employment Standards Act, 2000, S.O. 2000, c. 41 (“ESA”) which would have been eight weeks as an employee with 28 years of service.

Not surprisingly, the parties were far apart in terms of the assessment of what the reasonable notice period should be. HBC’s position was that it did not wrongfully terminate Pohl’s employment contract and that it offered a voluntary separation package that provided for 40 weeks of pay in lieu of notice of termination at the time of termination. This package was included Pohl’s pay in lieu of notice and severance pay. When Pohl rejected the offer, HBC paid him his minimum entitlements under the ESA.

When litigation ensued and the matter went before the court, HBC took the internally inconsistent position that Mr. Pohl’s reasonable notice period was within the range of 14 to 18 months and also that “the severance package offered by HBC to [Mr. Pohl] fell within the range of reasonable notice.” Centa J. rejected HBC’s position that 40 weeks could be an appropriate reasonable notice period for a long-term employee such as the Plaintiff. Pohl claimed that he was entitled to a 28-month notice period. In the end, Centa J. determined the reasonable notice period should be fixed at 24 months. In arriving at this decision, he carefully set out his reasons applying all of the Bardal factors: the length of employment, the character of employment, age of the employee, and the availability of similar employment having regard to the experience, training, and qualifications of the employee.

Length of Employment

In this particular case, Pohl had worked for HBC for 28 years which was essentially his entire working life. Pohl presented affidavit evidence that he had every intention of continuing to work for HBC until retirement. Centa J. found that this weighed in favour of a longer notice period and should be given significant weight.

Character

The court found that Pohl was entrusted with significant responsibilities and occupied an essential and integral role at the store. He was in a senior supervisory position where 30 sales associates reported to him.

Age

Pohl was 53 years old at the time of dismissal which was near the end of his working life. This was a factor which weighed in his favour.

Availability of similar employment

The court found that Pohl’s position as a retail manager was not specialized and there were other workplaces where he was eligible to apply. He also did not live in a remote region where retail management roles were scarce. While these factors supported a shorter notice period rather than a longer notice period, the court found that HBC dramatically overestimated the number of jobs that Pohl was qualified for. HBC identified as many as 907 positions. Pohl argued that HBC’s position was unfair and overinflated. Half of the job postings were duplicates, some were located in areas too remote to be appropriate such as Windsor, Northern Ontario, and even out-of-province, and some were for positions that did not match his skill set or experience, for example a position that involved selling women’s intimate apparel and a barista position at Starbucks. HBC also included postings where the pay was only $15.00 an hour which represented a significant pay cut from his former position.

Pohl presented evidence that he applied to 136 job postings. He provided a spreadsheet evidencing e his efforts. Even though Pohl had applied to 136 jobs, he still remained unemployed. The court found that this put the availability of jobs in perspective. This situation was also compounded by the fact that the dismissal occurred during the COVID-19 pandemic which resulted in an economic downturn. The court found that this meant that a longer notice period was appropriate.

Mitigation

HBC asserted that Pohl’s notice period should be reduced by six to ten months for failing to take reasonable steps to mitigate his damages. Centa J. accepted Pohl’s submission that he made good faith efforts and only deducted his notice period what was already paid to him by HBC as a salary continuance. In arriving at this conclusion, Centa J. rejected several of HBC’s arguments. One of these arguments was that Pohl failed to act reasonably when he rejected HBC’s offer of alternative employment when they terminated him.

Alternative Offer of Employment was completely unreasonable

At the time that Pohl was terminated, he was offered a position as an associate lead. This position was not at all comparable to the role that he previously held where he was paid $61,254 plus pension contribution and other benefits. With this new position, he would only be paid $18.00 an hour and there was no guarantee for the hours of work which varied between 28 to 40 per week. In order to accept this role, Pohl would be forced to resign and would give up all of his entitlement to the common law notice he accumulated through 28 years of service. In the event he was terminated, he would only be entitled to the ESA minimum notice period.

Centa J. noted that the offer of alternative employment represented a significant reduction in income even assuming he would be working the maximum hours of 40 hours per week. With no contractual promise for hours, which could range anywhere from 0 to 40, this new job role was extremely insecure. To make matters worse, HBC inserted a clause where it conferred itself with the right to make any change to his employment contract, at any time, for any reason, and such change would not be deemed a constructive dismissal. This included changes as fundamental as a change in position, duties, or compensation. Further, these changes would not trigger any entitlement to a notice period. The court aptly described the revocation of revocation of Pohl’s employment law rights as “breathtaking.” Indeed, Centa J. found that HBC offered “nothing of substance” in exchange for the extinguishment of Mr. Pohl’s legal entitlements and he was acting reasonably in rejecting the new position.

HBC extends a second unreasonable new position

HBC offered a second position to Pohl on November 1, 2021, more than a year after he was terminated. The role was called “Customer Site Experience Manager.” Pohl rejected the role which was inaccurately described to him in an offer letter. Although HBC characterized it as a identical to that which he held while he was employed, it was actually a hybrid IT/ data analytics / marketing position. The role required 5 years experience in a similar role as well as knowledge of coding (HTML, CSS, and Javascript). Pohl had no background or knowledge in IT, analytics, or product management. Centa J. found that the two roles were not even remotely comparable to one another.

Mental health struggles delay the start date for job search

As part of HBC’s argument that Pohl failed to discharge his duty to mitigate, it examined his efforts for the period immediately following his termination up until the point where he actually started looking for work. Pohl admitted that he did not start looking for work until February 2021 which was six months after he was dismissed. He explained that the insensitive manner of termination, coupled with the fact that his settlement package was woefully inadequate “felt like a kick in the gut.” Pohl started seeing his family doctor about his depressive symptoms. In January 2021, his doctor wrote a clinical note that he met the diagnostic criteria for severe depression. Pohl testified that his doctor told him that his depressive state was making his job search difficult.

Centa J. made some astute comments regarding whether a person who falls short of total incapacity but is nonetheless suffering from mental illness should be held to the same standard of an individual with no such health issues. He found that the court should adopt a nuanced rather than an all-or-nothing approach when considering the duty to mitigate. His comments regarding the intersection between mental health and employment law bear repeating:

[68]           Society’s understanding of mental health has developed significantly over the past decades. Our jurisprudence must assist to break down myths and stereotypes surrounding mental illness. I do not think it is helpful to analyze mental health as a binary construct where a person is either completely incapable of working or is totally fine. Where a plaintiff has presented evidence of mental illness, particularly where the plaintiff’s symptoms are triggered or exacerbated by the termination of employment, the court should adopt a nuanced approach and assess the extent to which that health condition affected the plaintiff’s job search.

 

 

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top