It is a very common scenario that a non-unionized employee leaves their old job because they were recruited by another company. The new company will induce the employee to join their workplace by offering the employee various incentives like higher pay or greater benefits. But what happens when the new employer fires the employee shortly after they were hired? What are the employee’s rights to termination and severance pay?
The legal term for what is being described here is called “inducement.” Inducement occurs when an employer has lured a new employee to join their company from their old job by offering things like an increase in income, better benefits, a promotion or better work-life balance. Typically, there is a period of “courtship” between the employer and the prospective employee during which the employer makes various promises.
Inducement comes into play in employment law when the new employer turns around and in short order fires the employee they have just induced (typically during a period of up to two years). Ontario courts will look at inducement in deciding what the reasonable notice period will be upon termination.
Generally, the greater the service period with the former employer, the more Ontario courts are willing to provide a longer notice period or pay in lieu thereof to the employee. To determine reasonable notice and / or termination pay in such instances, various factors are looked upon such as the employee’s age, position or job title, length of service and ability to find new or alternative employment. Moreover, a major factor in the analysis will be if the parties entered into an employment agreement and if there are a enforceable termination or probationary provisions.
Let us give you a fictitious example that will really crystalize the issue of inducement and reasonable notice. “John” is an office manager, he is 50 years old and works with an employer whose workplace is in Mississauga, Ontario. After nearly 10 years working for the employer in Mississauga, John is approached by another company, and they offer him significantly better pay and greater benefits if he goes to work for them. John is also taken out for lunches and is given tickets to a Toronto Maple Leaf’s hockey game. He is also told by the new prospective employer that his joining their team would mean a lot to them. So, he does so and leaves his old job in Mississauga. However, within 10 months of working for the new employer, they fire him without cause. The issue of inducement will be critical in the calculation of reasonable notice and termination pay in such a case. Without inducement factored into the calculation, he would not be able to use the previous 10 years with his old employer to determine reasonable notice. And, as set out above, length of service is one of the main factors used to determine the reasonable notice period. With inducement used as a factor, he could get noticed based on a length of services of nearly 11 years vs less than 1 year if inducement is not used as a factor.
Lost your job and were induced? Contact an employment lawyer!
The bottom line is that if you are an employee who was induced to leave their old job because a new employee offered incentives like higher pay or better benefits then you should seek out an employment lawyer if you were terminated. You may be entitled to a lot more in terms of termination pay than you realize. The employment lawyer should ensure that your inducement has been included as a factor in whatever termination pay was provided to you.
Also, as alluded to above, it is a common occurrence that the new employer in an inducement situation will ask the employee (sometimes even after they have been hired) to sign or agree to an employment agreement. It is very important that you do not sign the employment contract and that you contact an employment lawyer to review the agreement in order to protect your employment rights, especially upon termination. This is because the employment contract frequently seeks to limit your termination pay or reasonable notice and may provide that the new employee will not take stock of your previous years with your old job with respect to termination. An employment lawyer can help you understand what is going on, what the outcomes are likely with these concerns and provide ways in which you can counteract or contain these concerns.