While there is some element of courtship at the beginning of
every employment relationship, the Ontario Superior Court of
Justice (the "Court") in Rodgers v CEVA Freight
Canada Corp. provides a caution for employers who entice away
employees from secure employment. Although the employee's short
service and the length of the notice period may cause employers to
do a double-take, this decision illustrates the potential exposure
when dismissing a short-service employee who has been enticed away
from another position.
Inducement Cancels Out Short-Service
Rodgers had been the President of a transportation company for
11 years, earning in excess of $320,000 per year, when he was
approached by CEVA about a job opportunity. After seven interviews,
Rodgers turned down CEVA's employment offer. Thereafter, CEVA
made a second offer with a higher salary and a $40,000 signing
bonus, which was accepted by Rodgers.
As a condition of employment, Rodgers purchased shares in CEVA
Investments for $102,000 – the equivalent of 4.5 months'
salary. After his employment was terminated, Rodgers was first
advised that he could not sell his shares and later advised that
his shares were worthless.
Based on the foregoing facts, Rodgers argued that he had been
induced away from secure employment by CEVA, which cancelled out
his short service in determining the period of reasonable
The Court reviewed the circumstances of the recruitment and
found that there was "some measure" of inducement to
leave his previous position and join CEVA. Although CEVA did not
give Rodgers a specific assurance of long-term job security, based
on the required investment, the Court found that there was a least
an implied representation that Rodgers was about to embark upon a
long-term employment relationship with CEVA.
Determining the Notice Period
The Court looked at Rodgers' age, his position as the
Canadian manager of CEVA's operations, his limited education,
the fact that his work experience was confined to a single
industry, the limited number of similar positions, the fact that
Rodgers was required to make a significant investment with CEVA,
and his recruitment in general in setting a notice period of
fourteen months. While his employment with CEVA was for a short
period, this was the only factor that would point towards a shorter
Lesson for Employers
Although the appropriate period of reasonable is determined on a
case-by-case basis, this decision serves as an important reminder
of three key considerations employers should take into account when
contemplating recruiting or terminating an employee:
Although some employers are hesitant about drafting termination
clauses at the outset of an employment relationship, a carefully
drafted and negotiated termination clause is a powerful tool that
can limit or at least expressly quantify the employer's
liabilities in respect of an employee at the termination of the
employment relationship. Termination clauses do not have to be
limited to the minimums provided for under provincial employment
standards legislation – they can be more generous than the
minimums. However, without express language dealing with an
employee's entitlements upon termination, an employer's
liabilities are left to the common law and judicial discretion,
which are difficult to predict.
Length of Service. While length of service is
certainly one of the most easily quantifiable factors in setting
the notice period, absent express contractual language indicating
otherwise, there are no assurance that a short service employee
will be awarded damages based on a short reasonable notice period.
Courts are becoming more generous to short-service employees so
employers have to change their thinking and recognize that
short-service employees could be entitled to a disproportionate
Inducement. Even where job security is not
expressly promised, or even discussed, the method of recruitment
and offer of employment itself can create the implied promise of
job security and amount to inducement. If there is no clause in the
employment agreement that deals with termination entitlements, the
employer is taking the risk that a Court will set a
disproportionate notice period.
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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