By Howard Levitt & Hani Shamsi
The bar for employer conduct, especially upon termination, is becoming increasingly higher
Twitter Inc. has been in the spotlight since billionaire Elon Musk completed his purchase of the social media company late last month. But the decision to lay off nearly 50 per cent of the company’s workforce — with many of those employees finding themselves locked out of their company emails without warning before being dismissed the next day — has been the biggest spectacle so far.
Musk framed the “layoffs” as necessary to address revenue challenges the company was already facing before the acquisition closed. And, Twitter, to be fair, is not the only tech giant laying off employees. Meta Platforms Inc. recently announced it was terminating 10,000 employees while Amazon.com Inc. has said three per cent of its corporate workforce will be shown the door. These decisions pay no attention to borders, with many Canadian employees, especially those working remotely for the tech giants, affected.
While sometimes necessary, such cost-cutting measures can be costly, especially if the decisions are made rashly and carried out in a manner that Canadian courts consider to be in bad faith.
No one should be terminated by email. An in-person meeting, or a video meeting is ideal, followed by a phone call. Twitter instead sent an impersonal message to longstanding employees that their service was no longer required. In a job market where employees leave companies to choose a better work culture, this was beyond credulity.
Twitter’s manner of termination would be penalized in Ontario. A recent Ontario decision reprimanded retail giant Hudson’s Bay Canada for mistreating a 53-year-old employee upon termination. In line with previous decisions, the Court scrutinized the manner of termination in Pohl v. Hudson’s Bay Company (“HBC”) and awarded excess damages of $55,000 for Hudson’s Bay Company’s bad conduct.
When terminating Pohl, HBC offered an insubstantial offer of another position, paying a potential salary of zero to 50 per cent of Pohl’s previous salary. If Pohl had accepted the offer, he would have had to sign a contract to give up any future claims he could have brought against HBC regarding any future dismissal. Ontario law is clear on employees accepting unreasonable offers of continuing employment. They are not obliged to accept such an offer when their compensation, among other things, is materially reduced.
Interestingly, Twitter’s terminations were so ill-planned that some employees were asked to return to work. This offer would be scrutinized in Ontario in the manner evidenced by Pohl. Only reasonable offers addressing the same or better compensation should be considered.
Twitter’s mistakes will cost them in lawsuits, ad revenue and irreparable loss of trust through employees and potential job applicants.
Employers should consult legal counsel before mass terminations, which have varying rules depending on the jurisdiction.
The manner of termination matters. Courts award damages to employees terminated in bad faith. Actions such as blocking email accounts without warning will result in larger awards.
Companies with public profiles such as Twitter should tread particularly carefully as the ripples of publicized bad terminations could have severe collateral consequences.