Across Canada, employers are obligated to provide financial assistance to employees who have been dismissed from their employment in the form of reasonable notice, pay in lieu of notice, or some combination of both notice and pay in lieu.
The amount of notice an employer is required to provide will be determined on a case-by-case basis by assessing the specifics of an individual’s employment. While the courts will generally rely on four (4) primary factors, including an employee’s age, length of service, character of employment and availability of similar employment based on the employee’s experience and training, the courts will also extend their analysis to consider whether the dismissed employee was induced.
In dismissing employees, employers are encouraged to assess whether inducement occurred as failure to do so can result in additional liability for the employer as the dismissed employee may claim wrongful dismissal and be owed additional damages.
What is inducement?
In the employment context, inducement generally occurs when an employer and/or recruiter implements an aggressive recruitment strategy to pursue a prospective employee to leave secure employment to work for a new company.
Specifically, to constitute inducement, the employer and/or recruiter’s actions must go beyond the ordinary degree of persuasion. For example, the employer and/or recruiter may make several efforts to try to convince the employee to leave their current role and join the recruiting organization, which may include, but is not limited to, the following:
- Offering financial incentives;
- Making promises about potential promotions; and/or
- Adjusting the details of the role to fit the needs of the prospective employee.
Impact of inducement on the reasonable notice period
Employees who have been induced and then subsequently dismissed may be entitled to a larger award for wrongful dismissal damages.
Absent a written employment contract limiting a dismissed employee’s entitlements to those prescribed under employment standards legislation, such as Ontario’s Employment Standards Act, 2000, an employee will be entitled to common law reasonable notice and the factor of inducement will become an important consideration in determining whether to increase the reasonable notice period.
In considering whether inducement occurred, the courts will consider the following factors:
- 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 his/her due diligence before accepting the position by conducting his/her own inquiry into the company;
- Whether the discussions between the employer and the hired employee amounted to more than the persuasion or the normal “courtship” that occurs between an employer and a prospective employee; and
- The length of time the employee remained in the new position.
Case law demonstrates that employees found to have been induced to work with an employer/organization may be entitled to significant damages as compared to an employee who was not induced.
Best practices for reducing potential claims relating to inducement
By utilizing clearly written contracts, employers can provide clarity to employees with respect to an employer’s expectations during the employment relationship as well as what the employee is entitled to, including but not limited to, salary, benefitsand vacation entitlements.
By clearly defining job expectations and entitlements in writing, employers may be able to reduce potential claims relating to inducement.
Specifically, employers are encouraged to consider implementing or strengthening clauses related to the following:
- Ability to work;
- Termination; and
- Severance entitlements.
The potential liability relating to inducement may be significant, and therefore employers are encouraged to be mindful of the impact inducement may have on an employee’s entitlements upon dismissal as well as to proactively reduce potential claims by implementing or strengthening their employment contracts.
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