Author: Ashley Prommer
In the employment context, “inducement” refers to the act of persuading an employee to leave their current job and join a new company by offering promises of better compensation, improved working conditions, or other perks and incentives. While this practice is common in competitive job markets, significant legal complications may arise if promises made during the hiring process are not fulfilled or the employee is dismissed shortly after accepting the job offer.
This article will explore the legal principles of inducement, the remedies available to affected employees, and the different ways in which inducement is handled by courts in other jurisdictions, such as Ontario.
Establishing Inducement
The key legal question in inducement cases is whether the employee was lured into leaving their previous job based on false or misleading promises made by the new employer. A claim of inducement must be supported by evidence of active recruitment that goes beyond the usual “courtship” that occurs during the hiring process. Inducement can be explicit, such as offering a higher salary, a signing bonus, stock options, or other benefits, or it could be more subtle, such as assurances of secure, long-term employment and opportunities for career advancement.
Courts may also consider the employees reliance and expectation interests when determining the severity of the inducement in each case. However, like many other areas of law, courts will consider the overall circumstances of each case to determine whether inducement did in fact occur.
In one case, the B.C. Supreme Court held that the employee was not induced to leave his previous position because he had been actively searching for new employment when the defendant company offered him a job.
In another case, the court rejected the inducement claim on the basis that the employee’s expectations of secure, long-term employment were purely subjective, and there was no evidence of such promises being made by the employer.
Remedies for Employees
Inducement is often tied to broader legal principles applicable to employment law.
For example, if the promises made by the employer are set out in the terms of the employment contract but are later retracted or left unfulfilled, the employee may claim damages for breach of contract. The same may occur in relation to an implied term of the employment contract, such as the duty of good faith. If the assurances made by the employer are later revealed to be false or unfair, the employee may be entitled to damages for breach of contract as well as damages for the employer’s bad faith conduct.
On the other hand, inducement can also be addressed in relation to a claim of misrepresentation. If the employer made representations that turned out to be untrue, misleading, or inaccurate, and the employee had relied on those representations to their detriment, the employee may be entitled to damages for misrepresentation.
Even if an employee is not dismissed outright by their new employer, the employee may have a claim for constructive dismissal if the conditions at the new job are different than what was promised. In such cases, the employee can seek damages for their wrongful dismissal.
Inducement and Wrongful Dismissal
If an employee is induced to leave their previous employment but is subsequently dismissed from their new position, the employee may bring a claim for wrongful dismissal in relation to one or more of the legal principles described above. In such cases, inducement typically serves to increase the employee’s entitlement to pay in lieu of reasonable notice. However, not all cases of inducement will carry equal weight when determining the appropriate notice period.
For example, the B.C. Supreme Court in Ferweda v. Mercer Celgar Limited Partnership held that the employee had been induced to leave his previous job of 27 years and accept the offer with the defendant company based on promises of better compensation and benefits. The court awarded the employee 12 months’ notice given the severity of the inducement in relation to his age (53), his short tenure (2.5 years), and his limited job prospects.
In Munoz v. Sierra Systems Group Inc., the court awarded 10 months’ notice to an employee of 2.5 years after concluding that he would not have left his previous job without the promise of job security made by the defendant company. This award was later reduced to 8 months on appeal.
In Taner v. Great Canadian Gaming Corporation, the court awarded the employee 10 months’ notice when she was constructively dismissed from her employment just 6 months after she was hired. In this case, the employee had been induced to leave her secure employment in the United States and relocate to B.C. with expectations of secure, long-term employment with the defendant company.
A Different Approach — Inducement in Ontario
Although largely similar to the approach taken by courts in B.C., Ontario courts tend to focus on the principles of contract law when inducement is claimed in cases of wrongful dismissal.
In Antunes v. Limen Structures Ltd., the Ontario court rejected the plaintiff’s claim that he was entitled to an increased notice period on the basis of inducement. The court considered the plaintiff’s previous job and found that there was no “secure, long-term employment” from which the plaintiff was induced to join the defendant company.
However, the court found that the company did not act honestly and in good faith in its dealings with the plaintiff. The company had made misrepresentations to the plaintiff in the early stages of negotiations, and the plaintiff had relied on those misrepresentations in accepting the position with the company.
Interestingly, the court upheld the terms of the employment contract despite its findings of bad faith conduct and wrongful dismissal. The plaintiff was awarded $500,000 in damages in accordance with the terms of his employment contract, in addition to 8 months’ pay in lieu of reasonable notice.
The recent decision in Shelp v. GoSecure Inc. illustrates the more stringent approach taken by Ontario courts in situations of relatively short-term employment.
In this case, the employee was dismissed after 10 months of employment as part of a company downsizing. The court did not find that the employee was induced to leave his previous secure employment, as the employee had taken the initiative to follow up on the job opportunity after being approached by one of the company’s senior executives. The company hired the employee in good faith, without knowledge of its impending downsizing, and the employee had in fact received more during his employment with the company than he originally negotiated prior to accepting the position. Absent any finding of inducement, the employee was entitled to 6 months’ notice.
Contact Kent Employment Law
Inducement can have serious implications for any employment relationship. Whether it’s during the hiring process, negotiations of a new employment contract, or in the event of a dismissal, understanding the principles of inducement is essential for avoiding potential legal disputes.
Contact us today to schedule a consultation and learn how we can help you to navigate inducement in your employment relationship.
