Written on behalf of Peter McSherry
When an employee is wrongfully dismissed, whether through constructive dismissal or termination without reasonable notice and without cause, the court looks at various factors to determine the appropriate damages. These factors can include the employee’s age at the time of termination, the length of their service, and the nature and status of their position.
However, one crucial element the court often considers is whether the employee was induced to leave secure, stable employment to join the company that later wrongfully terminated them. If inducement is proven, it can often result in higher damages, especially if the employee is terminated shortly after joining the new employer.
Company Terminates Employee After Only 10 Months of Service
The Ontario Superior Court of Justice’s decision in Shelp v. GoSecure Inc. provides an example of how courts assess inducement claims. In this case, the employee, a 51-year-old man, was dismissed from his role as Vice President of Sales for Ontario and Western Canada after only 10 months. He had been earning a base salary of $190,000, plus up to an additional $190,000 in commissions annually. After being terminated, the employee filed a wrongful dismissal claim, seeking damages for what he argued was a wrongful termination.
Additionally, the employee argued that he was entitled to enhanced damages because he had been induced to leave his previous position for the role with the defendant employer.
Defining and Proving Inducement
The Supreme Court of Canada has established that when an employer convinces an employee to leave secure, well-paying employment with promises of career growth, better compensation, and job security and then later wrongfully terminates the employee without cause, the employee may be considered to have been induced. The employee may be entitled to longer reasonable notice damages in such cases.
The application of inducement in determining reasonable notice damages depends heavily on each case’s specific facts and circumstances. It is not always straightforward, and not every instance of inducement results in a higher damages award.
Factors Considered When Evaluating Inducement Claims
When assessing whether inducement took place, the court considers several factors. These include:
- The reasonable expectations of both parties when entering into the employment relationship.
- Whether the employee actively sought out the new position or if the employer made the first approach.
- Any assurances of long-term employment or promises of job security made by the employer to the employee.
- Whether the employee did their due diligence before accepting the job, such as researching the company or asking relevant questions.
- The nature of the communication between the employee and employer during the hiring process, particularly whether the employer’s communication went beyond the typical persuasive tactics used to attract talent.
- The length of time the employee remained in the new position—the longer the employee stays, the less significant inducement becomes in assessing damages.
The longer an employee remains in a position, the less weight inducement typically carries in determining reasonable notice damages. This is because the relationship becomes less about initial persuasion and more about the actual circumstances of the termination.
Employee Initiated Conversation About Change in Employment, No Pressure From Employer
In the Shelp case, the employee argued that he had been induced to leave his previous employment after being promised opportunities for career advancement with the defendant employer. He claimed that a senior executive at GoSecure, whom he had known for some time, had told him about a senior executive position available within the company. During their conversation, the executive suggested that the employee might be a good fit for the role. The compensation package offered was similar to what the employee had been earning at his previous job.
The employee was not actively looking to leave his job at the time of this conversation. His employment was secure, and there were no indications that he was dissatisfied with his current role. Despite this, the court found that the employee had not been induced to leave his secure position. Instead, the court found the employee himself had initiated the conversation about the job opportunity. The GoSecure executive had simply informed the employee of an available position and suggested he might be a good candidate. There was no pressure or persuasion from the executive to convince the employee to leave his secure job.
Multiple Job Changes Typical in Employee’s Industry
Moreover, the court noted that the employee had worked for seven different employers throughout his career, which was typical in the software sales industry. This indicated a high degree of professional mobility, suggesting that the employee was not particularly tied to his previous employer. Furthermore, the employee could find comparable employment within 11 months of being terminated by GoSecure, which further diminished the argument that he had left a secure position under duress.
The court concluded that the employee had not been induced to leave his prior employment for the GoSecure role, and therefore, the claim for enhanced damages based on inducement was not upheld. As a result, the court determined that the employee was not entitled to an extended period of reasonable notice damages.
Peter A. McSherry Employment Lawyer: Providing Trusted Wrongful Dismissal Advice in Guelph
The success of a claim for enhanced damages due to inducement depends on the case’s specific facts, including the employee’s motivations and the communications between the employer and the employee. Peter A. McSherry Employment Lawyer helps employees understand how inducement factors into wrongful dismissal cases and advocates for the maximum compensation they deserve. Since 1997, our firm has been dedicated to protecting the rights of employees in Guelph and the surrounding areas. To book a consultation, please call us at 519-821-5465 or contact us online.