Can an Employer Rescind a Job Offer in Canada?

Yes, an employer in Canada may rescind a job offer. However, employers who rescind job offers usually must pay the employee whose offer was withdrawn damages akin to that of a regular employee who is terminated from his position.

If an employee has accepted a job offer, and suddenly the employer takes the job offer away, the employee is wrongfully dismissed and entitled to contractual damages or termination pay in lieu of reasonable notice. The employer must provide the employee pay in lieu of reasonable notice as it would for any employee.

When would an employer rescind an offer of employment?  

The current job market is slowing down which has ultimately led to tech companies pulling their job offers to new employees. However, the only time an employer may rescind a job offer and not have to pay the employee contractual damages or termination pay in lieu of reasonable notice is if:

  • the job offer had certain requirements which were not met (such as conditional reference checks);
  • the applicant lied in the job interview (or in his application);
  • the employer has just cause to fire the new employee.

What happens if an employer rescinds a job offer? 

If you find yourself in a position where an employer has rescinded the job offer that you had accepted, that employer will have to pay damages for breaching the employment contract. Damages may vary depending on whether the contract was fixed or indefinite and its particular provisions

(i) Job Offer for Fixed Term Contract

Most employers hire employees on a contract for an indefinite term. Some employers, however, hire employees on a contract for a fixed term, called “contract employees” or  “fixed-term contract employees”.  Fixed-term contract employees may be defined not only by a definite period of time but also by the duration of a specific task or by a specified event. To learn more about contract employees read Contract Employees Ontario – What you Need to Know.

If a contract employee is on a fixed-term and they are terminated before the expiry of the fixed term, they do get damages for the breach of the contract. The amount of damages they are entitled to will be stated in the employment contract, or it will be the balance of the fixed term if the contract is silent on severance or the termination clause in the contract is unenforceable. The latter can be a massive windfall for the employee at the cost of the employer. For example, the case of Howard v Benson Group Inc., the employee was awarded the remainder of their fixed-term contract when the employer terminated the employee 23 months into a 5-year contract. 

Courts have ruled that the fixed-term contracts bring certainty to both the employee for that specified period of employment, and the employer because of the specific termination date. When an employer rescinds an offer of employment, even before the employee starts, the employer is taking away that certainty of employment and must pay the employee the salary and benefits the employee should have received had the employer not rescinded the job offer.

Further, because there is a fixed-term contract, the courts have found that there is no duty to mitigate one’s damages if an employer rescinds an employment contract.

(ii) Job Offer for Indefinite Contract

Employees are owed compensation also if the rescinded job offer is for indefinite employment. The difference with rescinding an offer of employment for an indefinite contract is rather than giving the employee damages for the fixed term contract, the employee is entitled to common law notice

Can an employer rescind a job offer in Ontario? In the recent case 0f Kim v. BT Express Freight Systems 2020, the Ontario Superior Court of Justice awarded the employee damages for a cancelled job offer. Mr. Kim left his previous employer after being approached by a different company, BT Express Freight Systems, to start employment there. When Mr. Kim signed the new contract, and left his previous employer, BT Express Freight Systems rescinded their employment offer only a couple of days before he was supposed to start working. Mr. Kim, unable to return to his previous employer, then sued the company. 

The Ontario Superior Court noted that there is no requirement for the employee to start employment for an employee to be awarded damages because of a rescinded employment offer. In addition, the court stated that when a valid contract between the parties is breached, the employee is entitled to common law’s reasonable notice and can sue for the appropriate damages.  

When an indefinite employment offer is rescinded, there is a duty to mitigate one’s losses, but the Court can award appropriate damages equivalent to the salary the employee would have made had the company not rescinded the offer of employment. The Court will assess the Bardal factors to gauge the reasonable notice period, the terms of the employment contract but not probation if the employee has yet to start their employment. In addition, the employee can still be entitled to severance if the employer rescinds the offer of employment.

Conclusion 

As an employee, you have rights when your employer rescinds a job offer whether it is a fixed-term contract or an indefinite contract. If your job offer has been rescinded after you had accepted it,  you may be entitled to compensation; call Monkhouse Law Employment Lawyers to speak with a legal professional who can help you understand your rights.

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