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Fishing for notice: British Columbia Supreme Court addresses inducement and contingency factors in wrongful dismissal suits

inducementIn a recent BC Supreme Court decision, Sollows v. Albion Fisheries Ltd., the court clarified what qualifies as inducement in the context of a reasonable notice period assessment. The court also took a novel approach to contingency, which can arise where the hearing takes place before the end of the employee’s reasonable notice period.

Background

Don Sollows’ employment was terminated in July, 2016, by Albion Fisheries Ltd. This was Mr. Sollows’ second employment stint with Albion – he previously worked for Albion for 19 years, from about 1985 to 2004. In 2004, Mr. Sollows accepted the role of senior manager for Albion’s competitor, Sysco Canada, in Calgary. In October, 2013, the President of Albion, Mr. Milobar, offered Mr. Sollows the position of Director of Marketing and Chief Sustainability Officer. In the course of discussions, Mr. Milobar told Mr. Sollows that he would retire soon, that Mr. Sollows would be considered for the position of president, and that “the job hereby offered shall be a secure one.”

Mr. Sollows accepted the position and moved from Calgary to Vancouver to work for Albion. In November, 2014, Mr. Milobar retired and Mr. Sollows was promoted to president after a competitive process. However, on July 15, 2016, after about three years’ employment, Albion terminated Mr. Sollows’ employment without cause. Mr. Sollows was 60 years old. The question of how much reasonable notice of termination Mr. Sollows was entitled to proceeded to summary trial, where the court awarded 10 months’ pay in lieu of reasonable notice.

Inducement to accept employment

Generally, where an employer actively recruits an employee to leave a secure job with the promise of a substantial pay raise, secure employment, or similar inducements, and shortly after accepting the position the employee’s employment is terminated, the inducement is a factor the court may take into account when assessing the appropriate period of reasonable notice. Depending on the promises made, the reasonable notice period can be extended significantly.

In this case, Mr. Sollows alleged he only left Sysco because Mr. Milobar promised the possibility of growth, which was not available at Sysco, and job security. In contrast, Albion argued that there must be some evidence that: (i) the representations went beyond the type of statements made in the ordinary course of recruitment; and (ii) the alleged representations actually induced the employee to leave secure employment.

Ultimately, the court agreed with Albion that an “evidence-based approach” must be taken in the circumstances. The subjective expectations of Mr. Sollows’ potential for advancement did not amount to inducement, otherwise “inducement would be found in nearly all wrongful dismissal cases.” Inducement requires evidence of explicit and specific promises that were made when the employment contract was offered (e.g. a promise that an employee could work there until they retire). The inducements must also go beyond the “usual course of business” in hiring employees. In this case, the court found that Albion did not promise Mr. Sollows the role of president (only that he would be considered) or job security.  As a result, inducement played no role in the assessment of the reasonable notice period.

Contingency

In some cases, courts will reduce the reasonable notice period because of the possibility the employee may find employment in the period between the trial and the end of the notice period (i.e. when the court-awarded reasonable notice period extends past the date of the trial). In Sollows, the trial took place five months after dismissal, the court’s judgement was rendered eight months after dismissal, and the court awarded a 10-month notice period. The court rejected Albion’s claim for a reduction in the notice period on the basis of contingency. However, because the employee demonstrated a genuine effort to mitigate, the court ordered that if Mr. Sollows found employment during the period between the judgment and the end of the notice period, he was to inform Albion’s counsel and the notice period would be reduced accordingly. This novel approach was preferred to “imposing an arbitrary contingency reduction.”

Summary

Although care is required when recruiting a potential employee, not all active recruitment activities will qualify as inducement. Something more than giving the employee the impression there is room to grow or job security is required. Actual evidence of the promises made by the company and the employee’s reliance upon those promises is necessary to sustain a determination of inducement. Nevertheless, employers can avoid claims of inducement by using written employment agreements that contain “entire agreement” clauses and confirm that the employee has not been induced by any promises.

The decision also suggests the court is open to reducing the employer’s liability for reasonable notice if: (i) the reasonable notice period is still running; (ii) the employee has demonstrated a genuine effort to mitigate; and (iii) the employee obtains new employment after the trial, but before the notice period runs out. It will remain to be seen if more judges adopt this approach in the future.

By: Monique Ronning, McCarthy Tétrault LLP

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Employer Advisor, McCarthy Tétrault LLP

Employment and labour lawyers at McCarthy Tétrault LLP
McCarthy Tétrault through their Employer Advisor blogs offers their perspectives on the latest legal developments applicable to the workplace. It provides their insights on legislative and regulatory developments, as well as new case law, while providing practical tips for employers and their human resources professionals when managing the workforce. McCarthy Tétrault is a Canadian law firm that delivers integrated business law, litigation services, tax law, real property law, labour and employment law nationally and globally. Several of their blog posts will be republished with permission on First Reference Talks. Read more
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