Inducement during Recruitment: Effects on the Notice Period
Inducement
An employee’s length of service is one of four factors courts will consider in determining the length of reasonable notice upon termination. Length of service is generally a straight-forward concept: the length of time one works for his or her employer. However, in some instances, courts may apply a surprising interpretation of length of service.
In some circumstances, an employee may be enticed or “induced” to leave their current employer for bigger and better prospects elsewhere. This occurs when a 3rd party employer contacts a company’s employees directly, or when contact is made through a recruitment agency, and that contact results in the employee’s resignation and commencement of new employment with the 3rd party employer. In either case, a court may find grounds for inducement and calculate an employee’s length of service as a combination of the employee’s length of service with the former employer and the employee’s length of service with the new employer. Given that length of service is a factor in determining the period of reasonable notice, inducement has the effect of increasing an employee’s reasonable notice period.
Courts will consider certain factors when determining whether inducement has occurred:
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 hiree amounted to more than the persuasion or the normal “courtship” that occurs between and employer and a prospective hiree;
the length of time the employee remained in the new position, the element of inducement tending to lessen with the longevity of the employment.
Other factors that have been considered by Ontario courts include the length/security of the employee’s previous employment and whether the employee was given a raise to leave their previous job.
However, courts have cautioned that not all examples of courtship or persuasion will result in a finding of inducement. In order to meet the required level of persuasion, such persuasion must exceed the level that exists in a typical hiring scenario. Thus, if an employee willingly leaves a secure job for a new opportunity, that employee has not necessarily been induced.
Effect of length of new employment
The general trend followed by the courts is that, absent some other prejudicial behaviour by an employer, the longer an employee is with a new employer, the smaller the impact of inducement on the notice period.
Inducement has been shown to have little or no effect on the notice period after as few as 22 months of employment with the new employer, as seen in in Bishop v. Beefeater (Niagara) Ltd., and after 30 months of employment with the new employer, as seen in Firatli v. Kohler Ltd. (c.o.b. Canac Kitchens).
Probationary Employment
In January 2016, the Ontario Superior Court of Justice – Divisional Court dealt with the issue of inducement as it relates to a probationary employee.
In Nagribianko v. Select Wine Merchants Ltd., the trial judge determined that the employer had induced the employee to leave his previous employment in order to enter into an employment contract with the employer. The trial judge took into account both periods of employment in calculating the employee’s length of service.
The trial judge’s decision was overturned on appeal. The Divisional Court found that even if the employer enticed the employee to leave his previous employment, it was not a proper case for a finding of inducement. This was because the employee chose to sign a new employment contract containing a three (3) month probationary period term and the employer dismissed the employee within that probationary period. A reasonable person in the same situation as the employee would have understood the word “probation” to mean a period of tentative employment in which the person would be assessed for permanent employment. Thus, the court considered probationary employment to be, on its face, inconsistent with an inducement or promise of long-term employment.
Considering that that employer had the lawful ability to terminate the employee’s employment in good faith during the probationary period, the employee was not entitled to reasonable notice. Thus, the action was dismissed.
Takeaway
Employers must have a firm understanding of the law of inducement. Hiring an employee for even a short period of time can have expensive consequences if a court determines that inducement has occurred. Having said that, if an employment contract contains a probationary period term, the Nagribianko case suggests that such a term may have the effect of negating inducement. Thus, for employers concerned about such a scenario, it may be wise to include a probationary period term into an employment contract.
