Executive Summary
Courts have shown they have zero tolerance for companies that breach the ‘duty of good faith’
Last month, a court punished the Hudson’s Bay Company because they breached the “duty of good faith” when they fired Mr. Pohl, a sales manager who had worked for them for 28 years.
The duty of good faith means that employers cannot be unduly insensitive or unreasonable when terminating. They must be candid and forthright. This is in order to protect employees from the power imbalance they have with their employers.
When HBC terminated Mr. Pohl, the company offered him a chance to stay on, but as a sales associate, at minimum wage and no guaranteed hours in exchange for Mr. Pohl’s agreement not to sue the company for reasonable notice. HBC claimed they wanted to limit the extent of the harm he suffered from the termination. The court didn’t believe HBC’s intention was honest and felt HBC was only looking for a way to avoid a constructive dismissal claim. Additionally, HBC didn’t pay Pohl his statutory entitlements until two months after his termination and failed to provide him with his record of employment for over two years. When HBC did send the ROE, the company mischaracterized his termination as a layoff.
The court also found felt that HBC was unduly insensitive in walking Mr. Pohl out the front door immediately after termination. Mr. Pohl received 24 month’s reasonable notice and $55,000 in damages for breaching the duty of good faith.