If you lure an employee away from another job, firing that employee could be expensive
Few employees today who have a career of any substantial length have stayed with just one employer throughout their career. Loyalty that would support longevity of service, either on the employer’s part or the employee’s, just does not seem to be an overriding principle in today’s employment market. Employment mobility is common, and when a certain combination of factors accompany a change of employment, trouble may be brewing.
To deal with the mobility of the modern workplace, the courts have developed a relatively new analytical tool or factor, called inducement, which the court will consider in appropriate circumstances. Inducement can have a significant effect on the damages for reasonable notice awarded by a court in wrongful dismissal cases.
Normally, the factors used by a court in setting reasonable-notice damages in wrongful dismissal cases are the age of the employee, the position or level of responsibility of the employee, the length of service of the employee, and the ease or difficulty the employee faces in locating and securing similar alternative employment. However, due to the mobility found in modern employment cases, inducement is added to these factors.
Simply put, an inducement occurs where the employer in question does something that can be said to have encouraged the employee away from existing prior employment, and into employment with the inducing employer. As with anything in the law, the test is more complicated than a simple description might suggest, and there are numerous possible defences to inducement claims. But the key points of inducement involve the prior existing employment that the inducing employer leads the employee to end so as to begin employment with the inducing employer. The most damaging cases of inducement involve prior employment that is both long-term and secure.
Sometimes, due to a certain combination of facts, inducement becomes a central factor in a court’s setting reasonable-notice damages, and it may override other factors, such as length of service with the inducing employer. When inducement plays a significant role in a court’s award of reasonable notice, the damages award will likely appear to a layman’s eye as being excessive, given what is typically a short length of service with the inducing employer.
Inducement fact patterns do have a “shelf life.” The basic premise underlying the doctrine of inducement is that the induced employee was cheated of long-term employment that would be somewhat approximate to the long-term employment that was left to take the new employment. Thus, the most clear cases of inducement involve obviously short employment in the new position. The longer the new position lasts for, the less likely that the factor of inducement will play a significant role in determining damages.
A classic inducement pattern that will play a significant role in a court’s award of damages for reasonable notice will involve a long and secure employment from the prior position compared to a short length of employment with the new employer. In a classic case of inducement, the employee would have long service with the first employer, and disproportionately short service with the inducing employer. In cases such as this, the inducing employer exposes itself to a claim for reasonable notice based not on the length of service with the inducing employer, but for a notice period approximately equivalent to a long-term employment, and on a worst-case basis, possibly the combination of lengths of service with the first employer and the inducing employer.
For example, if the length of service of the employee with the first employer was 15 years, and the length of service of the employee with the inducing employer was 6 months, the inducing employer may face a presumption that reasonable notice should be based not on a 6 month employment, but on a 15 year 6 month employment or something like it.
Additionally, inducement has overridden the fact that the new employment contained a probationary term, and the dismissal from the new employment occurred within that probationary time frame. The courts have ruled that it is just not fair for an employer to induce, then dismiss within a probationary term and expect, due solely to the probationary term, that there will be no damages claim.
Interestingly, inducement has applied to create a damages claim where the induced employee never actually started the new employment. Of course, a claim such as this will depend on the certainty of the actual job offer for the new employment.
So employers beware. Take careful stock of the potential role of inducement when providing reasonable notice for employees that are dismissed without cause.