THE EMPLOYERS' EDGE
COURT AWARDS SHORT SERVICE EMPLOYEE SIX MONTHS’ NOTICE DUE TO “INDUCEMENT FACTOR”
In wrongful dismissal matters, the court’s determination of reasonable notice is based on a holistic analysis of the affected employee’s unique circumstances. These set of circumstances are collectively known as Bardal Factors, which commonly include the employee's: (1) age at the time of termination, (2) length of employment, (3) character or nature of employment, and (4) the availability of similar employment.
However, one lesser known factor which may serve to lengthen notice awards that is often considered by the courts is inducement. The weightiness and application of this factor was confirmed in the 1997 Supreme Court of Canada decision, Wallace v United Grain Growers Ltd., where the Court indicated, “there is a need to safeguard the employee’s reliance and expectation interests in inducement situations”. However, the Court cautioned, “not all inducements will carry equal weight when determining the appropriate period of notice. The significance of the inducement in question will vary with the circumstances of the particular case and its effect, if any, on the notice period is a matter best left to the discretion of the trial judge.”
This analysis played a major role in a recent British Columbia Supreme Court decision, where a fulsome review of the plaintiff employee’s inducement by the defendant employer resulted in the court applying a significant premium to their already substantial damages award.
The plaintiff employee in this matter was an experienced professional engineer for nearly twenty (20) years, working primarily in the field of mechanical engineering. The plaintiff joined the defendant employer as an Engineering Manager in November 12, 2018. However, the plaintiff was terminated less than three (3) months later, on January 28, 2019, when the defendant decided that he was not a good fit for their team. Upon termination, the plaintiff was provided with one (1) months’ advanced notice, as expressly provided for in his employment agreement.
The court quickly held that the termination provision was unenforceable as a matter of law because it failed to comply with the minimum notice periods set out in the BC Employment Standards Act. As such, the analysis turned to a determination of the plaintiff’s common law notice entitlements. The plaintiff argued that he was owed at least twelve (12) months’ notice – despite failing to provide any cases that supported such a position. Whereas, the defendant submitted that “three months would be fair”, with reference to five (5) cases involving short-term employees.
Ultimately, the court determined that the plaintiff was entitled to four (4) months’ reasonable notice – before taking into account any increase resulting from the “inducement factor”.
The “Inducement Factor”
The court then turned their analysis towards the “inducement factor”. To do so, the court outlined the following factors which they took into consideration:
- At the time the plaintiff was approached by the defendant, he had been securely employed as a Project Manager for nearly two (2) years;
- The defendant had “headhunted” the plaintiff by pursuing him through LinkedIn;
- The plaintiff had engaged in an extensive interview process involving four (4) separate meetings with the defendant’s representatives; and
- Ultimately, the defendant designed “an irresistible offer having regard to [the plaintiff’s] personal circumstances”, with an assignment based in Vancouver on a major project, a greater vacation entitlement and a substantially increased salary.
These factors taken as a whole allowed the court to determine that the defendant’s actions amounted to “inducement far beyond the standard 'wooing' of a prospective employer that might be 'taken with a large grain of salt'”. As such, the court increased the reasonable notice period by two (2) months for a total notice period at common law in the amount of six (6) months.
This case serves as an important reminder for employers to tread carefully throughout all stages of the employment lifecycle. While important factors, the court’s analysis of termination entitlements are not solely focused on the employee’s age, years of service or the availability of alternate employment. Rather, it has been demonstrated time and time again that the court’s analysis is a broad and general one, with a focus on unique circumstances occurring before, during and after the employment relationship.
In this particular case, the defendant’s actions precipitating the plaintiff’s employment, coupled with their hastiness in terminating the employee, ultimately resulted in court awarding a two (2) month employee a staggering $128,383 on account of wrongful dismissal damages. Making matters worse, this total represents a sum in excess of $45,000 more than would have been owing had the “inducement factor” not played in a role in this decision.
While terminations are never easy – they certainly do not need to be this unnecessarily expensive. The CCP team can assist employers experiencing difficulty navigating their termination obligations, with expert legal advice and ways to minimize liability. Please contact one of our lawyers who can assist with all of your workplace concerns.
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