Inducement and Misrepresentation
Inducement occurs when employers actively try to recruit workers away from pre-existing employment. Workers being induced should always keep a record of any communications to deal with the risk of misrepresentations. Induced workers should be aware of three types of misrepresentation: negligent, fraudulent, and innocent. Each type of misrepresentation can warrant compensation for workers induced to switch jobs. In Queen v Cognos, the Supreme Court held that employers must be diligent in making representations regarding the sort of employment being offered, especially when inducing workers. Failure to represent the employment opportunity appropriately can be negligent misrepresentation, even before any employment contract is signed. If this happens, and the worker detrimentally relies on those misrepresentations, legal remedies may be available. In Bruno Appliance and Furniture, Inc. v Hryniak, the Supreme court also established the test for fraudulent misrepresentation, requiring:
- A false representation by the defendant,
- Some knowledge of the falsehood of the representation by the defendant,
- The false representation caused the plaintiff to act; and,
- The plaintiff’s action resulted in a loss.
If an employer misrepresents the job opportunity to the worker and violates these elements of fraudulent misrepresentation, remedies would likewise be available. Even innocent misrepresentations can result in restitution, recission of contract, or other monetary awards, as outlined in Canaccord Genuity Corp. v Pilot. Workers should be aware of the threat of misrepresentations when employers attempt to induce them to change their work, as misrepresentations could result in the employment opportunity being very different than expected.
Concerns about Non-compete Clauses in Previous Employment Contracts
When being induced, workers should also be cognizant of any non-compete clauses in their previous employment contracts. If a previous employment contract with a non-compete clause covers the field where the worker is being induced to work, there may be a breach of contract. While the Employment Standards Act was amended in 2021 prohibiting non-compete clauses within employment contracts, this provision applies to employment contracts made on or after the amendment date. In other words, non-compete clauses that form part of an employment contract signed before the amendment date may still apply.
If an employment contract signed before the ESA amendment has a non-compete clause, the clause itself may still be unreasonable. In H. L. Staebler Company Limited v Allan, the Court held that non-compete clauses are presumptively unenforceable. Enforcing a non-compete clause requires both a proprietary interest entitled to protection, and reasonable temporal and spatial limits. However, even if a non-compete clause meets both requirements, it may still be unenforceable if a non-solicitation clause would instead adequately protect the employer’s interests. Furthermore, in Shafron v KRG Insurance Brokers, the Supreme Court indicated that ambiguity in the temporal and spatial limits of a non-compete clause can also result in the unenforceability. Nevertheless, in Payette v Guay Inc., the Supreme Court did uphold a non-compete clause, indicating that despite non-compete clauses being generally unenforceable, on occasion the court will give them effect. Consequently, workers being induced should always be wary of any non-compete clauses they may have in previous employment contracts, to avoid any potential legal issues arising from breach of contract.
Effects of Inducement on Reasonable Notice Period
Workers should also keep in mind the effects of inducement on any potential notice period owed if their employment is terminated. Workers are entitled to reasonable notice or pay in lieu thereof when they are terminated without cause. As it stands, Bardal v. The Globe & Mail Ltd. (Bardal) provides some idea of what sort of factors should be considered in determining a worker’s reasonable notice period. These factors include:
- Type of Employment,
- Age,
- Length of service, and
- Availability of similar employment.
Still, the factors outlined in Bardal are non-exhaustive, and other factors besides those listed above can and should be considered if they might reasonably influence the reasonable notice period. In Wallace v United Grain Growers Ltd., the Supreme Court held that certain inducements tend to increase a worker’s reasonable notice period. Specifically, inducements that promise career advancement, along with greater responsibility, security, and compensation with the new organization will typically be seen as increasing a worker’s reasonable notice period. Sometimes, as in Alcatel Canada Inc. v Egan, workers who are induced may be terminated shortly after their employment begins. When this happens, inducement can cause time spent at a previous company to be used in calculating the worker’s reasonable notice period. Consequently, an employer who induces a worker and subsequently terminates them without cause may be compelled to provide a greater notice period or pay in lieu thereof. If you have any questions or need further information, please don’t hesitate to contact us.