We Want You: Inducement and its Consequences
The Superior Court of Justice’s Decision in Butcher v. Protagon Display Inc., 2011 CarswellOnt 7143
The plaintiff, Butcher (hereinafter the “Plaintiff”) worked for Somerville Merchandising Inc. (hereinafter “Somerville”) as a project manager for over six (6) years. The Plaintiff brought an action for wrongful dismissal. The Plaintiff departed from Somerville in January 2008 and was at this time making approximately $56,000.
In November 2007, the Plaintiff was approached, without prompting, by a recruiter regarding a potential employment opportunity with the defendant, Protagon Display Inc. (hereinafter the “Defendant”). The Plaintiff had not been looking for new employment and had not posted his resume at the time he was contacted in November 2007 by the recruiter. The Plaintiff subsequently spoke to the recruiter two or three times about the employment opportunity with the Defendant. The Plaintiff then had three meetings with the Vice President Operations of the Defendant. The Defendant made an initial employment offer to the Plaintiff with a starting salary of $65,000. The Plaintiff rejected this offer because he wanted greater job security. Further negotiations took place and the Plaintiff was offered a starting salary increase of $67,000 with a term of job security and full time employment. The Plaintiff accepted the offer and began working for the Defendant on January 7, 2008.
On April 2, 2009, the Plaintiff was terminated by the Defendant without just cause, after having worked for one (1) year and three (3) months. The Plaintiff was given four (4) weeks’ pay in lieu of notice after termination.
The trial judge was tasked to determine the following issues:
- what is the reasonable notice period;
- whether the Plaintiff sought job security; and
- whether the Plaintiff was induced to leave his former employment.
For the purposes of this case summary, Issue 3 will only be discussed.
Superior Court of Justice’s Decision
The trial judge first discussed the Supreme Court of Canada’s decision in Wallace v. United Grain Growers Ltd. which states that the inducement of the prospective employee by the new employer is one of the factors considered in determining the notice period. Many courts have sought to compensate the reliance and expectation by increasing the notice period that should be considered reasonable.
However, the trial judge noted that not all inducements will carry the same weight, the significance of the inducement in the circumstances and its effect on the notice period should be considered on a case by case basis. Inducement is found where the conduct of a potential employer goes beyond mere persuasion and beyond the normal “courtship” that occurs between a potential employer and prospective employee. The key factors considered by the trial judge to determine if the conduct was beyond mere persuasion included:
- did the employer seek the employee;
- was job security a pivotal part of the discussion prior to hiring; and
- was there a significant increase in compensation.
Here on the facts, the trial judge found that:
- the Plaintiff was actively sought by the Defendant. He did not post his resume online, he was cold called by
the recruiter and he was not actively seeking employment;
- the Plaintiff had expressed that he did not want to jeopardize his stable employment with Somerville without some kind of assurances of longevity. This was evidenced by he Plaintiff’s insistence on a second offer to include a clause which alluded to job protection and longevity; and
- the strongest factor in favour of inducement was that the Defendant offered he Plaintiff a twenty-one percent (21%) increase in the Plaintiff`s salary.
As such, trial judge found that the Plaintiff was induced by the Defendant.
Turning to what impact the inducement had on the notice period, the trial judge considered Bishop v Beefeater (Niagra) Ltd. (“Bishop”). Bishop held that:
the negative effect of any inducement to leave a previous employer tends to
dissipate the longer the employee stays at the new job. That is, the overall vulnerability of the employee to early termination with little notice lessens as time goes on and the employee establishes a longer connection with the new employer.
Consequently, the trial judge found that because the Plaintiff remained with the Defendant for over a year of employment, the inducement did not have such a major impact. As such the trial judge found that the reasonable notice period previously determined in the judgment was only be extended by one-half (1/2) months.
The above case is an example of how employers should be careful when recruiting new employees. Employers should be advised to be careful about what they promise to new potential employees, who already have stable secure employment. Further and less so from the above example, employers should keep track of their recruiter agents and what they promise or how they recruit employees to ensure you are not liable for their possible inducement on your behalf. It is also advisable that an employer explicitly write down what was promised as well as have an enforceable termination provision which limits an employee to statutory minimums. Although the consequence of inducement in this case was only half a month of additional notice owed, inducement has the potential to have significant cost consequence to the employer.
The above article is for general information purposes only and does not constitute legal advice. If you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere.