Ontario company overlooked offer letter with executive’s new position that superseded old contract when it terminated him
The Ontario Superior Court of Justice has granted a fired Hudson’s Bay Company executive 16 months’ pay in lieu of reasonable notice for less than 12 years of service, but it has denied his claims for bad-faith damages or extra notice due to the economic circumstances brought on by the COVID-19 pandemic.
Melvin Yee, 62, was hired by Hudson’s Bay Company (HBC) in February 2008. He worked in several different roles for HBC, including director of product design and development for private brands. In this role, he signed a contract dated June 19, 2015 that included specific payments in the case of termination.
On April 2, 2018, Yee’s role changed to director, product design and development. When he moved into the position, he signed a transfer offer letter that stated that it would “supersede and render void any prior verbal or written representations concerning the conditions of your employment within the company.” The letter didn’t include any provisions for termination payments and stated that it would “govern the relationship of employment within the company.” The letter was copied to HBC’s human resources department to put in Yee’s file.
Yee’s compensation included a base salary, an annual incentive plan (AIP) based on company sales and objectives — if objectives weren’t met, it was the company’s discretion to pay a bonus — group benefits, pension plan benefits and discounted pricing on purchases of HBC products.
Old contract provision used for termination
HBC terminated Yee’s employment on Aug. 28, 2019. Interestingly, the termination letter referred to the June 19, 2015 contract that Yee had in his previous role and paid him in accordance with the termination provisions of that document. Yee was paid the equivalent of 11 months’ salary and benefits. He was also allowed to have continued discounts on HBC products and HBC provided him with three months of relocation counselling.
Yee sued HBC for wrongful dismissal, claiming he was entitled to more damages in lieu of reasonable notice as well as $100,000 in damages for “bad faith, moral, aggravated or punitive damages” because HBC used the contract that had been superseded by a new one to determine the amount of his termination pay. Yee said that HBC was careless and caused him unnecessary stress.
HBC said that the April 2, 2018 document related to Yee’s role change had been labelled a “transfer offer letter” rather than an employment contract, which was why the June 19, 2015 contract was referred to for his termination letter.
The court referred to the standard Bardal factors in determining the length of reasonable notice to which Yee was entitled. At 62 years of age, Yee wasn’t “old” by current standards, but he was “within the latter stages of the usual working life career for most persons.” The court added that Yee’s 11-plus years of service was a neutral factor, as it wasn’t brief but also wasn’t long enough for him to be considered a “life long” employee.
The court found that Yee’s executive position and high salary favoured a longer notice period — as well as some of his previous roles with HBC that included a vice-president position.
Yee also argued that the COVID-19 pandemic should be factored into the difficulty of obtaining similar employment, pointing to an earlier decision by the same court that indicated economic factors such as a downturn in the economy could justify a longer notice period and stating that he began submitting applications to find new work in February 2020 and the pandemic struck Canada shortly after that. However, the court found that because Yee’s termination occurred several months before the onset of the pandemic, its effect on employment opportunities shouldn’t be considered on the same level as if the termination occurred during the pandemic.
The court agreed that Yee was entitled to a reasonable notice period of more than the 11 months for which he was paid upon termination but not quite as long as Yee wanted. It settled on 16 months as an appropriate notice period, meaning it would have lasted until Dec. 28, 2020.
The court also found that Yee was entitled to the bonus he would have earned under the AIP during the notice period along with benefits and pension plan payments.
As for Yee’s claim of bad faith and moral damages, the court found that “HBC either initially overlooked or failed to appreciate the impact of the April 2, 2018, transfer offer letter” when it used the earlier 2015 contract to determine Yee’s termination pay. However, HBC provided 11 months’ salary and benefits plus three months of relocation counselling, which was close to his actual entitlement. In addition, there was no evidence of any conduct by HBC that indicated bad faith or caused stress to Yee beyond what would normally come with termination of employment, said the court in dismissing Yee’s claim for bad faith, moral or punitive damages.
HBC was ordered to pay Yee damages equivalent to 16 months’ base salary, benefits, pension contributions and AIP bonus — totalling $255,576.46 — minus the 11 months’ worth the company had already paid him under the old contract terms.
For more information, see:
- Yee v. Hudson’s Bay Company, 2021 ONSC 387 (Ont. S.C.J.).
