When trying to fill a position, it is not uncommon for employers to look to individuals who are already employed and showing great promise in their field. This is especially true when businesses are hiring for more senior-level positions. However, while luring or inducing an experienced employee to leave their current job and come to work for your company can result in a benefit to your business, it can also open up some risks when it comes to what is owed at termination. While hopefully, these new hires go on to have a long and fruitful relationship with the company, in some cases the match just isn’t there. When an employee is induced to leave secure employment for a new role, and then later terminated, courts may decide that a longer notice period is owed to that employee.
In determining the length of notice an employee is entitled to upon termination at common law, the courts consider factors such as length of service, age, position, and the availability of similar employment, given the employee’s experience, education, and other factors. When an employee has been induced, courts may calculate the notice period by combining the years of service from the previous company to calculate the notice period or there could be additional damages awarded for misleading communications to new employees.
When considering whether an employee was induced, the courts will consider what steps were taken by the employer in terms of how aggressively they pursued the new hire, along with what was communicated concerning assurances of long-term employment, compensation, and growth within the company. Where the employee actively participates in the process, including making first contact with the prospective employer, it reduces risk.
Careful employment contract drafting can reduce the risk of having additional notice awarded to an employee who may argue that they were lured. Ontario courts have confirmed that acceptance by an employee of an employment contract which includes a probationary period is inconsistent with any allegation of inducement or promise of long-term employment (2016 ONSC 490, aff’d on appeal, 2017 ONCA 540). Accordingly, including a well-drafted probation clause in your employment contract can help defend against this type of claim. Specific language can also be included in the contract requiring the employee to confirm that the company has not made any representation or inducement that has caused them to leave their previous employment.
If you work with a recruiter to find your new employees, you should stay aware of what methods they are using to find your new hires and the impact that could have on claims of inducement. As well, don’t forget that in Ontario, as of January 2024, recruiters need to be licensed. This requirement already exists in other provinces, and employers should be sure to check their recruiters are staying up to date with changing law.
As always, speaking with an employment lawyer before starting the process of a new hire, and taking care to update your employment contract regularly can save time and money down the road.
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