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Inducement in Employment Law

Many employees will voluntarily apply for job positions and obtain employment on their own volition. However, in certain circumstances, a highly coveted employee may be recruited away from a long-term position for a new job with lofty promises.  These promises could include representations of long-term employment, salary raises, incentive compensation, and overall better work-life balance.  If a third-party employer or recruitment agency contacts you and induces you to leave long-term employment for a new job, this could have implications in the event your new position is terminated without cause after a relatively short period of time.

When determining the amount of severance pay an employee is entitled when terminated without cause from their employment in Ontario, the Courts will consider a number of factors, including the length of service the employee has been working with the company, the age of the employee, the level of seniority, and the amount of time the employee is expected to obtain replacement employment. Another factor that is relevant in determining the severance pay calculation is whether the employee was recruited away from previous long-term employment.

If an employee was induced away from a long-term job for a new employment only to be terminated without cause shortly thereafter, a Court may use the entire length of service (previous job + new job) for the purposes of calculating the terminated employees severance entitlement. Accordingly, inducement has the impact of increasing an employees entitlement to reasonable notice. In determining whether an argument of inducement will be successful, the Court looks at a variety of factors, including but not limited to:

-The expectation of the parties when the new employment agreement was entered into. Specifically, were representations made to the employee to suggest that a long-term employment relationship would be reasonably expected?  If a probationary clause is contained in the new employment agreement, this suggests tentative, or a trial employment, rather than permanent employment. Accordingly, a probationary clause in an employment agreement can undermine an argument of inducement;

-The length of time the employee remained employed in the company.  Inducement tends to be weakened the longer the length of time an employee remains employed with a new company.

There are many other factors that are relevant in determining whether an argument of inducement will be successful in increasing the reasonable notice period for an employee that has been terminated without cause in Ontario.  If you have recently been terminated from your employment after being recruited from a long-term position, please contact the Goldstein Law firm for a free consultation to discuss your rights.