Month: April 2025

Understanding Inducement in Employment Termination

When wrongfully dismissed, employees may be entitled to common law reasonable notice depending on their contract of employment. If an employee is entitled to such reasonable notice, the length of the notice period is dependent on various factors. One factor among many is whether or not the employee was induced to leave a previous job and join their new employer. 

An employee may have been induced to leave a former job with promises of things like secure employment, improved work conditions, or increased pay. If they are subsequently terminated with the new company, the fact that they were induced to leave their old work and come to their new employer is a factor worth considering when assessing the notice period. Courts take the position that it is unfair for the new employer to simply lure employees away from secure employment with promises for better work only to then dismiss the employee with very little notice. Consequently, inducement is a factor that tends to increase the length of notice an employee may be entitled to.

Case Spotlight: Miller v. Alaya Care Inc.

In a recent case before the Ontario Superior Court, an employee argued that they had been induced to leave their secure job and join new employment with the defendant. In determining whether the employee had been induced, the Court first analyzed the enforceability of the employment contract. After assessing the language used in the employment agreement, the Court determined the termination clause was unenforceable for violating the Employment Standards Act. Additionally, the Court also looked towards the terms of the offer letter which was argued to be the relevant governing document. However, the letter itself did not unambiguously contract out of the employee’s entitlement to common law reasonable notice. Additionally, the offer letter did not address things like bonuses or benefits, which also made it unenforceable. Since the contract of employment did not contract out of common law, the employee was entitled to reasonable notice. 

How Inducement Affects Notice Periods

When assessing the length of the notice period, typically the length of employment is a significant factor in determining the notice period. However, the employee had only been employed for roughly 8 months prior to her termination. On its face, the short period of employment might suggest a lower notice period. However, the Court also found that the employee had in fact been induced. In assessing whether she had been induced, the Court pointed towards several factors to consider, including:

1. The reasonable expectations of both parties;
2. Whether the employee sought out work with the prospective employer;
3. Whether there were assurances of long-term employment;
4. Whether the employee did due diligence before accepting the position by conducting their own inquiry into the company;
5. Whether the discussions between the employer and prospective employee amounted to more than the persuasion or the normal “courtship” that occurs between an employer and a prospective employee;
6. The length of time the employee remained in the new position, the element of inducement tending to lessen with the longevity of the employment; and
7. The age of the employee at termination and the length of employment with the previous employer.

When applied to the facts of the case, the Court held that the employee was in fact induced. She was “lured” by the employer to leave her 12-year job at a competitor and advised that she would help to grow the company. Additionally, the employer was pursuing an “aggressive growth strategy” and promised to defend the employee if her previous employer tried to litigate against her for joining the company. 

Given all the relevant factors, including the fact that the employee had been induced to join the company, the Court found that reasonable notice for the employee was 14 months. Over that time frame, she was entitled to not only her salary, but also pro-rated bonus for the time worked, bonus over the notice period, and pro-rated RSUs which would have vested during the notice period.

Unjust Dismissal for Federal Employees

Most federally regulated employees rely on the Canada Labour Code as their employment standards legislation, which confers onto them protections for occupational health and safety and protections against unjust dismissal. Under the Code, non-unionized federally regulated employees may be entitled to expansive remedies if they have been unjustly dismissed, which could include things like reinstatement and compensation. For any remedy to be provided under the Code, the first requirement is that the employee actually be dismissed. While this might seem obvious, dismissal can itself be highly controversial, as has been seen in a recent decision at the Canada Industrial Relations Board.

Case Background – Maruschak

The Board recently released a ruling on an unjust dismissal case. In Maruschak, the complainant alleged that he had been unjustly dismissed after he had a performance review meeting with his manager. The complainant advised his manager that he was recording the meeting and was told to end the recording. However, the complainant did not end the recording until he left the meeting. Shortly after the meeting, the complainant alleged he was again approached by his manager who was angrily shouting at him, told him he was faking an injury, called him a slow driver, told him to “finish the day, you’re done”, and that the manager would hire a new driver. After this encounter, the complainant believed he was terminated from his work. The employer contacted him afterwards to ask where he was, telling him that he was not dismissed and that he should report back to work, failing which he would be deemed to have abandoned his employment. Despite this, the complainant did not return to work, believing that he had been terminated and was under no obligation to return to work given the way he was terminated.

The employer’s side of events varied significantly. In particular, the manager stated he was very calm and professional during the performance review meeting. He denied meeting with the complainant afterwards and denied telling the complainant he was faking his injury or that he told him he was “done”. He reached out to the complainant after the weekend to ask if he was coming to work, only for the complainant to reply he was not since the manager fired him the Friday before. The manager asked what he was talking about and told him to report to work, but the complainant did not respond. The complainant did not respond to any phone calls from the manager. Ultimately, HR contacted the complainant to tell him to return to work or else he would be deemed to have abandoned his employment. The entire issue before the Board came down to whether the complainant was unjustly dismissed in the first place or whether he had merely abandoned his employment, hence disentitled to any remedy under the Code. 

Credibility

The Board had to engage in a credibility analysis, as it held that neither the complainant nor his manager proved particularly credible without some documentation corroborating their version of events. The Board noted that assessing credibility requires a consideration of “the witness’ motives, the witness’ relationship to the parties, the internal consistency of their evidence and inconsistencies, and contradiction in relation to other witness’ evidence”. In addition, the Board referred to factors considered by the British Columbia Court of Appeal, which include “opportunities for knowledge, powers of observation, judgement and memory, ability to describe clearly what he has seen and heard” to assess credibility. The Board took issue with the complainant’s testimony in that it conflicted with both the recording of his performance review meeting and with a telephone call he recorded with a friend the same day he had been terminated. As for the manager, his testimony was also inconsistent as he initially denied having met with the complainant after the performance review meeting, only to acknowledge he may have done so. Additionally, the manager’s testimony was inconsistent about his temper in interactions with the complainant. The only witness the Board found credible was the HR manager, who was not present during the alleged termination incident. Nevertheless, given the complainant’s own credibility issues, the Board determined that the complainant ultimately abandoned his employment.

Dismissal or Abandonment 

Ultimately, the Board determined that the complainant had not been dismissed. In the Board’s view, a reasonable person would not believe the complainant had been dismissed. Firstly, the complainant’s manager had no authority to dismiss anyone on his own, he would need HR authorization. Additionally, the language of “you’re done” was determined to be a frequent phrase which the manager used for ending conversations. These, and the effort to contact the complainant and have him return to work, convinced the Board that the complainant had not actually been dismissed, but had abandoned his job. Since the complainant was not dismissed, he was not entitled to any remedy for unjust dismissal.  

Most federally regulated employees rely on the Canada Labour Code as their employment standards legislation, which confers onto them protections for occupational health and safety and protections against unjust dismissal. Under the Code, non-unionized federally regulated employees may be entitled to expansive remedies if they have been unjustly dismissed, which could include things like reinstatement and compensation. However, non-unionized federally regulated employees would do well to be aware of the differences in procedure for dismissals pertaining to human rights violations. 

Procedure under the Canada Labour Code

Under the Code, non-unionized federally regulated employees may file a complaint with Employment and Social Development Canada if they believe they have been unjustly dismissed. To do so, the employee must have worked for 12 consecutive months and not be unionized, pursuant to s. 240 of the Code. If the complaint cannot be settled at this stage, they can request that the matter be referred to the Canada Industrial Relations Board. For many employees, their complaint would proceed through the standard unjust dismissal procedure, and if not settled, result in a hearing and adjudication by the Board.

However, there are administrative procedural limitations before the Board can consider an unjust dismissal complaint. These limitations are outlined in s. 242(3.1) of the Code. The first is that no complaint shall be considered by the Board if the employee is laid off due to lack of work or discontinuance of function. The second limitation is that no complaint shall be considered by the Board if a procedure for redress has been provided under Parts I or II of the Code or under any other Act of Parliament. It is this second limitation that causes issues for employees who have been terminated for human rights issues. 

Kaseke v. Toronto Dominion Bank, 2025 FCA 8

In a recent case before the Federal Court of Appeal, Kaseke v. Toronto Dominion Bank, the complainant filed an unjust dismissal complaint before the Board which was ultimately dismissed. The Board ruled that the complaint should be addressed under the Canadian Human Rights Commission rather than by the Board. In doing so, the Board cited s. 242(3.1) as a limit to their jurisdiction. The complainant applied for judicial review before the Federal Court of Appeal. 

The Court outlined the long-standing principle that employees who believe their termination is a result of human rights violations must follow the procedure outlined under the Canadian Human Rights Act, rather than the one under the Canada Labour Code. The Court noted that the jurisprudence for this issue has followed this principle for over fifty years. Unfortunately, the complainant believed that she could find a fulsome remedy by following the procedure under the Code. She raised in her judicial review the fact that the denial of her complaint would cause her significant prejudice at this stage, since she had missed the necessary time frame to file a complaint under the Canadian Human Rights Act. However, the Court pointed out that she had been advised by the Board early on in her complaint that there would be a jurisdictional issue. Had she filed under the Act, and the Commission determined that the Board would be better suited to handle the issue for her, the Commission could have referred the matter to the Board to deal with. The Court reaffirmed that this is the correct procedure for terminations associated with human rights complaints. The Board must deny jurisdiction over the matter, as the Commission retains primary jurisdiction. Only if the Commission decides to refer the matter to the Board will the Board have jurisdiction to address a termination violating human rights.

Another issue raised by the complainant was that the Canadian Human Rights Act does not provide for the same remedies as those outlined under the Code. The Court rejected this argument. The Court examined relevant jurisprudence showing how the Code operates under a “make whole” philosophy, with the intention to restore an unjustly dismissed employee to the same position they would have been in had they not been unjustly dismissed. However, the Court also indicated that the remedies outlined under the Canadian Human Rights Act are also “make whole” remedies, including orders to cease the discriminatory practice, prevent discrimination in the future, reinstate the complainant, compensate the complainant for expenses and lost wages, and further compensation for pain, suffering, and willful or reckless discrimination. 

Baker v. Van Dolder’s Home Team Inc., 2025 ONSC 952

The Ontario Superior Court recently reaffirmed the decision reached last year in Dufault v. The Corporation of the Township of Ignace. In that case, it was decided that the employment contract’s termination provisions violated the Employment Standards Act. In particular, the employment contract’s “With Cause” provision purported to allow the employer to terminate the employee for cause without any payments, contrary to the Employment Standards Act. Additionally, the “Without Cause” provision purportedly provided the employer “sole discretion” to terminate the employee. The Court took issue with this language in Dufault and noted that it is a violation of the Employment Standards Act to terminate an employee while they are on any of the protected leaves outlined in the act. 

The Importance of Precedent

The Court acknowledged that it could depart from previous decisions issued from the same level of Court on occasion. In doing so, the Court referred to the Supreme Court’s decision in R v. Sullivan outlining the value of precedent in the Canadian legal system. Departure from precedent is only to occur in very narrow circumstances; namely if:

1. The validity of the judgement has been affected by subsequent decisions;
2. The judge overlooked some binding case law or a relevant statute; or
3. The decision was otherwise made without full consideration.

The Court then turned to consider whether the decision in Dufault fell under any of the outlined circumstances. It held that none of these circumstances operated in the case of Dufault. Consequently, the Court reasoned that the decision in that case must be adhered to on the basis of precedent. 

In the present case, the employee faced a very similar set of termination provisions to those found in Dufault. The Court turned its attention towards the “Without Cause” provision first. In this case, the contract purportedly allowed the employer to terminate the employee at any time. The employer attempted to argue that this language is distinct from that found in Dufault. However, the Court did not countenance such arguments. Instead, the Court determined that the purported ability to terminate an employee at any time violated the ESA just as it did it Dufault. The Court likewise indicated that it was bound to adhere to the reasoning in Dufault due to its precedential status. Consequently, the Court ruled that the “Without Cause” provision of the employment contract was unenforceable.

The Court then turned to consider the “With Cause” provision of the employment contract. In the “With Cause” provision, the employer purported to be allowed to terminate the employee on the basis of just cause without providing any termination or severance pay. Like with Dufault, the Court found that this language violated the Employment Standards Act, as it set too low of a standard than that set by the Employment Standards Act regarding when termination without payment could be made. The Court also indicated that, even if the “Without Cause” provision was individually enforceable, the “With Cause” provision’s violation of the Employment Standards Act renders all termination clauses unenforceable.