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Employers across Canada are under significant pressure to find the right employees to support their businesses. Given the low unemployment rate, employers are finding it hard to secure the talent needed to properly serve their growing business.

It has accordingly become increasingly common for employers to actively recruit top-performing employees from their jobs with other companies. While this can be a viable approach, it does often come with a risk to employers engaging in aggressive marketing.

Inducement or Recruitment?

Inducement occurs when an employer/recruiter pursues an employee from their current position through an aggressive recruitment strategy. Usually, this takes the form of an employer/recruiter making several efforts to try to convince an employee that it is worth them leaving their current role to join the recruiting organization. This may include offering financial incentives, making promises about potential promotions, and/or adjusting the details of the role to fit the needs of the prospective employee.

Courts have analyzed inducement by assessing a range of factors, including:

  1. The reasonable expectations of the parties;
  2. Whether the employee sought out work with the employer;
  3. Whether there were assurances of long-term employment;
  4. Whether the discussions between the parties amounted to more than persuasion or the normal “courtship” that occurs between an employer and a prospective employee; and
  5. The length of the employee’s tenure with their employer.

Whether or not inducement occurred is important because it can result in additional liability for the employer and, by extension, additional entitlements for employees.

Specifically, courts will take into consideration inducement in determining the amount that an employee is entitled to in relation to wrongful dismissal. If an employee was found to have been induced to work with an employer and is later terminated, they may be entitled to significantly more damages in a wrongful dismissal action than an employee who was not induced.

Misrepresentation

The law of inducement makes it clear that employers would be wise to be mindful of any promises they make during the hiring process. Employers are specifically expected to be honest and direct when discussing benefits and the advantages of joining their enterprise to potential employees at the hiring stage.

If an employee is misinformed, relies on information provided to them by the employer, and accepts a position with the new employer, then an employer may be liable for negligent misrepresentation if a dismissal occurs. Examples of this would be promises of bonus entitlements or promotions within a certain time period.

Employees should, therefore, make note of any promises made to them during the hiring process, because those promises may result in higher wrongful dismissal damages in the event of termination.

Things to Consider in an Employment Contract

A clearly written employment contract can help to provide clarity to employees about what is expected of them during their employment as well as what they can expect from their employer (salary, benefits, vacation entitlements, etc.).

Specifically, a written contract that clearly defines job expectations and entitlements may reduce potential claims relating to inducement. These can include clauses relating to the following:

  • Ability to work
  • Termination clause
  • Severance entitlements

Employees should, therefore, pay attention to the clauses in their employment contract, as they may significantly reduce entitlements compared to what the law would otherwise provide.

Takeaways

The potential liability relating to inducement should make both employers and employees aware of the impact it can have on payments to be provided on termination of employment. Employees would, for example, be wise to negotiate larger severance packages based on inducement. If there was not an opportunity to do so, or if they have had their employment terminated after joining, they should speak with an employment lawyer to have the matter reviewed.

An employment lawyer can help them to navigate through this process and to carefully examine the details of any employment agreement. An experienced lawyer will ensure that their rights are pursued to the maximum in various scenarios, including in relation to a wrongful dismissal claim.

If you find yourself in a similar situation as outlined above and you are looking for legal advice, contact Toronto employment lawyers Sultan Lawyers at 416-214-5111 or via email at mlahert@sultanlawyers.com.


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