Leaving a secure, well-paying job for a new opportunity can be a significant decision. Employers and recruiters often approach experienced employees who are already working elsewhere, offering higher compensation, career advancement or assurances about the new position.
But what happens when an employee accepts the offer, leaves secure employment and is terminated after only a short time with the new employer?
In Ontario, the circumstances surrounding recruitment may affect an employee’s entitlement to common-law reasonable notice following termination. This legal principle is known as inducement.
What Is Inducement in Ontario Employment Law?
Inducement occurs when an employer persuades an employee to leave existing employment to accept a new position. Where an employee is terminated, the circumstances of that recruitment may be relevant when determining the appropriate period of common-law reasonable notice.
In Bardal v. Globe & Mail Ltd. (1960), 24 DLR (2d) 140 (Ont HC), the court identified several factors relevant to determining reasonable notice, including the employee’s age, length of service, character of employment and availability of comparable employment, having regard to their experience, training and qualifications.
Inducement may be an additional consideration that lengthens the reasonable notice period.
In W. v. United Grain Growers Ltd., [1997] 3 SCR 701, the Supreme Court of Canada recognized that inducement may affect reasonable notice. At paragraph 85, the Court explained that the significance of inducement varies according to the circumstances of the particular case.
The principle recognizes that an employee may have relied on the employer’s recruitment efforts when deciding to give up secure employment. However, not every recruitment effort will have the same legal significance, and accepting a new job does not automatically establish inducement.
How Does Inducement Affect Reasonable Notice?
Where an employee is entitled to common-law reasonable notice, a court may consider whether the employer actively persuaded the employee to leave secure employment.
Relevant circumstances may include promises of job security, opportunities for career advancement, increased responsibilities, higher compensation or other incentives offered during recruitment. The employee’s previous employment circumstances and the length of time spent in the new position may also be relevant.
However, inducement does not automatically result in a particular increase in notice. The effect depends on the evidence and the circumstances of the employment relationship.
An enforceable termination clause in an employment agreement may also affect an employee’s entitlement to common-law reasonable notice.
What Are the Signs of Inducement in Employment?
Not every employee who changes jobs has been induced to leave secure employment. However, certain recruitment circumstances may support an inducement argument if the employee is subsequently terminated.
Examples may include:
- Repeated recruitment efforts: An employer repeatedly approaches an employee who is already working elsewhere and encourages them to accept a new position.
- Promises of job security: The employer makes representations about long-term employment or the stability of the new position.
- Significant financial incentives: The employer offers a signing bonus, higher compensation or other benefits to persuade the employee to leave their existing job.
- Career advancement opportunities: The employer promises greater responsibilities, a more senior position or opportunities for professional growth.
- Pressure to accept an offer: The employer places time limits on an offer or strongly encourages the employee to make a quick decision.
These circumstances do not automatically establish inducement. Courts consider the overall recruitment process, the employee’s previous employment circumstances and the significance of any representations made by the employer.
Ontario Employment Law Cases Involving Inducement
Canadian courts have considered inducement in cases involving employees who left existing employment after being recruited for new positions.
Inducement After Leaving Secure Employment
In D. v. Paragon Gaming EC Co., 2010 ABPC 390, an Alberta court considered the circumstances of an employee who had been recruited from secure employment to work at a new casino.
The employee worked for approximately 18 months before being dismissed without cause. The court determined that a notice period of approximately two months would otherwise have been appropriate, but increased the award to four months after considering the inducement.
Although this was an Alberta decision, it illustrates how recruitment circumstances may affect the reasonable notice assessment. It does not establish a fixed formula for Ontario employees.
Significant Recruitment Incentives and Reasonable Notice
In R. v. CEVA Freight Canada Corp., 2014 ONSC 6583, the Ontario Superior Court of Justice considered an employee who was actively recruited for a new position.
The employee attended seven interviews, including a meeting in Houston with the chief executive officer of the employer’s global parent company. After initially rejecting an offer, the employee accepted a subsequent offer that included a $40,000 signing bonus.
The employee was later terminated after working for the employer for just under three years. The court awarded 14 months of reasonable notice, taking the recruitment circumstances into account.
The decision illustrates that inducement may be relevant even where an employee has worked for the new employer for several years. However, the appropriate notice period must be determined based on the individual facts of each case.
Does Inducement Still Matter After Several Years of Employment?
The length of time an employee remains with the new employer may affect the significance of inducement.
An employee who is terminated shortly after leaving secure employment may have a stronger argument that the recruitment circumstances should influence reasonable notice. As the employment relationship continues, the importance of the original inducement may diminish.
There is no universal cutoff after which inducement automatically becomes irrelevant. The assessment depends on the circumstances of the particular case.
What If You Were Laid Off After Relocating for a New Job?
Some employees not only leave secure employment but also relocate to another city or province to accept a new position. If the new employer terminates their employment shortly afterward, the circumstances surrounding recruitment, relocation and termination may raise additional legal considerations.
Relocating does not automatically increase an employee’s severance entitlement. However, inducement, representations made during recruitment, employment contract terms and relocation-related agreements may all warrant review.
For more information, read our article on severance rights after relocating for a new job in Ontario.
What Should Employees Do If They Were Recruited and Then Terminated?
If you were persuaded to leave secure employment and were subsequently terminated, your entitlement to reasonable notice may depend on more than the length of time you worked for the new employer.
Employees should retain their employment agreements, offer letters, recruitment emails and other communications concerning job security, compensation or advancement opportunities. These records may help establish the circumstances surrounding the decision to accept the position.
Before accepting a termination package or signing a release, consider having an employment lawyer review your agreement and the circumstances of your recruitment and dismissal.
Monkhouse Law represents employees in Ontario employment law matters, including wrongful dismissal and severance disputes. If you were recruited away from secure employment and subsequently terminated, contact Monkhouse Law for a free 30-minute phone consultation to discuss your rights.