Court slams HBC for walking long-serving manager, accused of no wrongdoing, out the front door of Toronto store

HBC’s decision to escort a long-serving manager out of a store after he was fired without cause, and had been accused of no wrongdoing, has attracted $45,000 in moral damages from an Ontario court.

That was on top of 24 months’ notice and an additional $10,000 in punitive damages for a delay in paying him his entitlements under employment standards legislation in a blistering rebuke from the Ontario Superior Court of Justice.

Darren Pohl started working for HBC in 1992. Over the next 28 years, he worked as the sales manager of eight departments at the store in Toronto’s Eglinton Square mall.

On Sept. 15, 2020, HBC terminated Pohl’s employment without cause. Although it did not assert any misconduct on his part, it directed his supervisor to immediately walk him out the front door.

No written contract

Pohl did not have a written employment contract with HBC. The company said it did not wrongfully terminate his employment contract. It offered a voluntary separation package that would provide 40 weeks’ of pay in lieu of notice of termination.

That offer was inclusive of his statutory entitlements, including notice of termination and severance pay.

When Pohl refused that offer, HBC paid him his minimum entitlements under the Employment Standards Act.

HBC took the position that the supports offered to him “met or exceeded his legal entitlements.”

HBC said a reasonable notice period in this case was 14 months to 18 months’ notice, which the court noted was much higher than it offered him at the time of termination. The Ontario Superior Court of Justice said the company did not provide a single case that indicated 40 weeks was the appropriate amount of pay in lieu of notice.

The Bardal factors

Pointing to the Bardal factors (length of employment; character of employment; age of the employee; and availability of similar employment having regard to the experience, training and qualification of the employeee) the court said HBC’s range was too low.

Tenure

“Mr. Pohl worked at HBC for 28 years,” wrote Justice Robert Centa. “I find that this length of service, particularly in 2022, makes him an employee of long tenure.”

Character of employment

Pohl’s title was sales manager or customer experience manager. The court said this was a senior, supervisor position at the store. He had 30 associates reporting to him at the time he was terminated.

His duties included interviewing and hiring; scheduling; assigning tasks; coaching; and responding to and resolving escalated customer concerns, among others.

“It is clear that HBC entrusted Mr. Pohl with significant responsibilities and that he fulfilled an essential and integral role at HBC’s Eglinton Square store,” wrote Justice Centa.

Age

Pohl was 53, meaning he was towards the end of his working career, but it was not at an end, the court said.

Availability of similar employment

Pohl’s duties were not specialized or unique to HBC, the court said. He also did not live in a remote region where similar employment is unavailable.

He applied to 136 jobs that were comparable to his former position, he told the court. HBC took the position that there were in fact 900 jobs he could have applied for, but the court rejected that number as “grossly inflated.”

It also pointed out that Pohl was terminated during the pandemic.

“HBC filed evidence that the pandemic significantly harmed its business, which resulted it in it deciding to dismiss at the same time as Mr. Pohl “many other employees in the same or similar roles”. There is no evidence before me that HBC was the only employer in this situation, which would have made it more difficult for Mr. Pohl to find a comparable job,” wrote Justice Centa.

Reasonable notice period

Pohl sought 28 months’ notice, HBC stuck to its 14 to 18 month range.

The court settled on 24 months, stating there were no exceptional circumstances that would have justified going beyond that period.

In arguing that Pohl didn’t mitigate his damages by finding alternate work, HBC pointed out that it offered him continued employment as an associate lead. But that would have taken his compensation from a full-time job that paid him $61,254 plus pension contributions and other benefits to a job working anywhere from 28 to 40 hours at $18 per hour (or about $35,000 per year if he worked 40 hours week for 48 weeks.) It also allowed HBC to terminate him at any time without cause by paying ESA minimums.

That offer was not continued employment because it required him to “voluntarily relinquish” his former position along with all his required service, the court said.

HBC asked the court to deny all compensation above ESA minimums because he did not accept its offer.

“I decline to do so,” wrote Justice Centa. “HBC’s offer was unreasonable. No reasonable person would have accepted this offer.”

Benefits

On top of his pay, the court also added benefits for 24 months at $351.38 per month, less the eight weeks he remained on HBC’s benefit plans post-termination.

“Damages are meant to put Mr. Pohl in the position he would have been in had the company provided him with reasonable notice of termination,” wrote Justice Centa. ” Equally, damages should not overcompensate Mr. Pohl or confer a windfall on him.”

Pay cut

Pohl also tried to recoup a 25 per cent pay cut HBC implemented during the pandemic, amounting to $1,766.94.

The company made a unilateral decision to cut wages due to COVID-19. That wage cut was a breach of his employment contract and would have been sufficient to justify a constructive dismissal claim, the court said.

But Pohl continued to work at the new wage, and in doing so made that fundamental change OK.

“If an employee acquiesces to the employer’s modification of the contract, the change ceases to be a unilateral act, does not constitute a breach, and does not amount to a constructive dismissal,” wrote Justice Centa. “He condoned HBC’s course of conduct by continuing to work during and after the period of wage reduction.”

The claim for the wage cut was denied.

Moral damages

Pohl sought $50,000 for the way his dismissal was handled, and found a favourable ear in the court.

Justice Centa outlined four factors to justify an award of $45,000:

First, the decision to walk him out the door was “unduly insensitive.” He was a loyal, 28-year employee who had committed no misconduct. There was no justification for treating him this way.

Second, the offer of a sales associate job was misleading and a breach of the duty of good faith and fair dealing. The offer was carefully crafted to extinguish his rights upon termination.

Third, HBC violated the ESA by not paying out the wages it owed him in a lump-sum within the required period of time. Compliance with the act is not an option, and the employer does not require direction from the employee to comply with the law, the court said.

“It is a large, sophisticated employer and there is no excuse for it not complying with its obligations under the (act),” the court said.

Fourth, HBC was required to issue a record of employment (ROE) within five days of the interruption of his employment. HBC did not do so. And when they were issued, they incorrectly described the reason and stated the recall date was “unknown.” They should have stated “not returning.”

Punitive damages

Pohl sought $100,000 in punitive damages. The court said it agreed with HBC’s submission that punitive damages are only to be awarded in exceptional cases for malicious, oppressive and high-handed conduct that offends the court’s decency.

The company said that, at all material times, it treated the plaintiff with honesty and in good faith.

The court did not agree.

“In my view, the failure to pay out the wages owing to Mr. Pohl in accordance with the ESA (or upon repeated demand by his counsel) and the failure to issue a timely or correct ROE justifies an award of punitive damages,” wrote Justice Centa.

It awarded $10,000 in punitive damages.

Total damages

The court awarded total damages of $149,662.50 once it deducted $40,050.64 that had already been paid by HBC.

For more information see Pohl v. Hudson’s Bay Company, 2022 ONSC 5230 (CanLII)

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