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:
- The reasonable expectations of both parties;
- Whether the employee sought out work with the prospective employer;
- Whether there were assurances of long-term employment;
- Whether the employee did due diligence before accepting the position by conducting their own inquiry into the company;
- 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;
- 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
- 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.