Fired after Being Head-Hunted

In general, when determining damages for wrongful dismissal, courts typically consider an employee’s years of service with their most recent employer, without factoring in past service with previous employers. However, an exception arises when an employee was induced or recruited to leave a secure, long-term job by their most recent employer. Generally, inducement occurs when a new employer offers certain benefits, such as an increased salary, job security, improved working conditions, to persuade an employee to resign from their current employer and accept employment with the new employer. For instance, if an employee, who was not actively seeking new employment, is contacted by someone from Company B and enticed with attractive opportunities and promises, leading them to resign from Company A and join Company B, the court may calculate their severance based on the combined service with both employers. 

The success of an inducement argument relies on demonstrating that the employee was not actively searching for work at the time of contact by the new employer. The weight given to inducement diminishes with the length of the employee’s tenure with the new employer. For example, an inducement argument will carry more weight if an employee is terminated by the new employer shortly after starting work vs. after many years. 

In determining if an employee was recruited or induced to leave secure employment by the new employer, and the weight, if any, that should be given, Ontario Courts also consider factors such as reasonable expectations of the parties, assurances by the new employer of long-term employment, due diligence conducted by the employee, and the nature of discussions between the employee and employer.  The presence of an employment agreement may also influence the outcome. 

The Role of Inducement in Calculating Reasonable Notice

Reasonable notice is the amount of notice (or pay in lieu of) an employer must provide to an employee when terminating their employment without cause. The purpose of reasonable notice is to allow the terminated employee sufficient time to secure alternative employment. In Ontario, reasonable notice (absent an enforceable termination provision) is determined by several factors, including the employee’s length of employment, the employee’s age, the nature of their position, and the availability of similar employment opportunities.

However, when inducement is involved, it becomes a significant factor in determining reasonable notice. The principle of inducement recognizes that an employee who is enticed into accepting  a new position based on certain promises or assurances should be entitled to greater notice or compensation upon termination. 

It is important to note that the success and weight given to an inducement argument vary based on the specific circumstances of each case and are subject to the court’s discretion. Seeking legal advice is recommended for dismissed employees where inducement may be a relevant factor.