Being terminated after only a few months at a new job can leave employees uncertain about their severance rights, particularly if they left secure employment to accept the position. In Ontario, an employee’s entitlement to compensation following termination is not necessarily determined by length of service alone.
Even employees who have worked for a relatively short period may be entitled to common-law reasonable notice or pay in lieu of notice, depending on their employment contract and the circumstances of their dismissal. Where an employer actively recruited an employee away from secure employment, a legal principle known as inducement may also be relevant.
Can You Receive Severance After Only a Few Months of Employment?
Yes. Short-service employees may have legal entitlements following termination, although the amount and type of compensation depend on their circumstances.
Under Ontario’s Employment Standards Act, 2000 (ESA), eligible employees who have been continuously employed for at least three months are generally entitled to statutory termination notice or termination pay when dismissed without cause, subject to applicable exceptions.
Statutory severance pay under the ESA is a separate entitlement that generally requires at least five years of employment, along with other eligibility conditions. Employees who do not qualify for statutory severance pay may nevertheless have other termination entitlements.
Where common law reasonable notice applies, there is no fixed formula based solely on years of service. Factors such as the employee’s age, position, experience and availability of comparable employment may also be relevant.
Learn more about common law reasonable notice in Ontario.
What If You Were Recruited Away From Secure Employment?
Inducement occurs when an employer persuades an employee to leave existing employment to accept a new position. If the employee is subsequently terminated, the circumstances surrounding recruitment may be relevant when determining the appropriate period of common-law reasonable notice.
For example, an employer may approach an experienced employee who is already working elsewhere and offer higher compensation, greater responsibilities, career advancement or assurances about the new position. If the employee relies on those representations and leaves secure employment, the recruitment circumstances may become important if the new employment ends shortly afterward.
However, simply leaving one job for another does not automatically establish inducement. The nature of the recruitment, the employee’s previous employment circumstances and any representations made by the new employer must be considered.
For a broader explanation of inducement and relevant court decisions, read Hired Away, Then Terminated: Inducement Promises Made, Then Broken.
Can Inducement Increase Reasonable Notice for Short-Service Employees?
Inducement may be particularly relevant where an employee is terminated shortly after leaving secure employment. In W. v. United Grain Growers Ltd., [1997] 3 SCR 701, the Supreme Court of Canada recognized that inducement may be considered when determining reasonable notice.
At paragraph 85, the Court explained that not all inducements carry equal weight and that their significance depends on the circumstances of the particular case.
For short-service employees, this means that the circumstances surrounding their decision to leave secure employment may be relevant to the notice assessment. However, their previous years of service are not automatically added to their employment with the new employer.
What Factors May Affect an Inducement Claim?
Several circumstances may be relevant when assessing whether an employee was induced to leave secure employment.
Who Initiated the Recruitment?
Where an employer actively approaches an employee who is already working elsewhere and encourages them to accept a new position, this may support an inducement argument. By contrast, an employee who independently applies for an advertised position may have different circumstances to consider.
However, who initiated contact is not necessarily decisive. The overall recruitment process and the representations made by the employer remain important.
What Promises or Incentives Were Offered?
Promises of greater compensation, increased responsibilities, career advancement or long-term employment may be relevant, particularly where they influenced the employee’s decision to leave secure employment.
An employee does not necessarily need to have received a promotion or substantial salary increase for inducement to be considered. The significance of any representation depends on the circumstances and the evidence available.
How Extensive Was the Recruitment Process?
Recruitment may involve multiple interviews, salary negotiations, meetings with senior management or other discussions about the proposed position. These circumstances can help establish how the employment relationship developed and whether the employer actively encouraged the employee to leave their previous job.
Participating in several interviews or negotiating an offer does not automatically prevent an employee from establishing inducement. The relevant question is whether the employer’s conduct and representations materially influenced the employee’s decision to accept the position.
How Long Did the Employee Remain in the New Position?
The length of time an employee remains with the new employer may affect the significance of inducement. An employee 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. However, there is no universal cutoff after which inducement automatically becomes irrelevant.
What If You Were Terminated During Your Probationary Period?
Some short-service employees are dismissed while still considered probationary employees. Whether a probationary period affects their termination entitlements depends on the employment agreement, applicable legislation and the circumstances of dismissal.
In N. v. Select Wine Merchants Ltd., 2017 ONCA 540, the Ontario Court of Appeal considered the effect of a probationary period in an employment contract. The decision recognized that probationary employment may involve an initial period during which the employer assesses an employee’s suitability for the position.
However, being described as a probationary employee does not automatically eliminate all termination rights. Employers must comply with applicable statutory requirements, and the wording and enforceability of contractual termination provisions may also be important.
Employees who were recruited away from secure employment and subsequently terminated during probation should not assume that they have no potential entitlement without first reviewing their employment agreement and recruitment circumstances.
What If You Relocated for the New Job?
Some employees leave secure employment and relocate to another city or province to accept a new position. If they are terminated shortly afterward, the circumstances surrounding recruitment and relocation may raise additional legal considerations.
Relocation does not automatically increase an employee’s severance entitlement. However, representations made during recruitment, employment contract terms and relocation-related agreements may be relevant.
Learn more about severance rights after relocating for a new job in Ontario.
What Should Short-Service Employees Do After Termination?
If you were terminated after only a few months or years with a new employer, do not assume that your length of service alone determines your entitlement to termination compensation.
Keep copies of your employment agreement, offer letter, termination letter and severance package. If you were actively recruited, retain relevant emails, messages and other communications concerning compensation, job security, responsibilities and promises made during recruitment.
These documents may help establish whether inducement is relevant and whether your employer’s termination offer reflects your potential legal entitlements.
Before accepting a severance package or signing a release, consider having an employment lawyer review the circumstances of your recruitment and termination.
Speak With an Ontario Employment Lawyer About Your Severance Rights
Being terminated shortly after starting a new job can be particularly difficult when you left secure employment to accept the position. Depending on your circumstances, your entitlement to reasonable notice may extend beyond the minimum amount initially offered by your employer.
Monkhouse Law represents employees in Ontario employment law matters, including wrongful dismissal, severance disputes and employment contract issues.
If you were terminated after a short period of employment, contact Monkhouse Law for a free 30-minute phone consultation to discuss your employment rights.