Many businesses are taking a more intentional approach to recruitment in the current economic environment. In some cases, this can involve actively seeking out top talent from competing firms, or re-hiring former employees, colloquially known as “boomerangs.”
Targeted talent acquisition strategies have many potential benefits to employers. However, employers should also be aware that when intentional recruitment crosses the line into what is known as “inducement” in employment law, it risks increasing the employer's liability down the road when enticed employees are let go.
Two recent Ontario cases show the potential consequences of inducement in practice.
Poaching The Star Executive - Miller v. Alaya Care Inc.
In Miller v. Alaya Care Inc.,1 an executive employee with significant experience in a niche industry was recruited to join the employer as its Vice President. At the time, the employee had nearly twelve years' service with the employer's biggest competitor, and was the most senior employee of that company in Canada.
The employee was initially approached by the employer's co-founder on LinkedIn and continued her discussions with the company's executive team over the phone and during in-person meetings. In those discussions, the employer asked the employee about her current compensation.
The employee subsequently accepted an offer of employment with the new employer, which provided increased compensation in the new role, including stock awards which would vest over time.
Although the employee negotiated for the offer to include an extra week of vacation and to indemnify her from legal action from her current employer, she did not specifically request that she be credited with her years of experience in the industry upon joining the new employer.
The employee was let go seven months into her new role. Despite the employee's short service, the Court found that the employee was entitled to a common law reasonable notice period of 14 months, taking into account the employer's inducement and the employee's anticipated long-term employment with the Company.
In essence, the Court elongated the employee's notice period to account for the long-term secure employment the employee left to join the company.
Re-Hiring the Boomerang Employee - Lachapelle v. St. Laurent Automotive Group Inc.
In Lachapelle v. Saint Laurent,2the employer approached and re-hired a “boomerang” employee. The employee previously worked for the employer for almost five years, before voluntarily leaving to work for another company for nine months.
The employee's new contract with the employer provided for increased compensation. Among other things, the employer also agreed that the employee would be eligible for benefits, vacation allowances and personal days immediately upon re-hire. The parties never discussed termination pay or treating two periods of employment as one.
The employer terminated the employee's employment, without cause, fourteen months after re-hiring him. The employee was 28-years-old at the time.
On the basis of inducement (and the effects of the Covid-19 pandemic), the Court found that the employee was entitled to a seven-month reasonable notice period, taking into account his cumulative six years of experience with the employer across two separate periods of employment.
Takeaways for Employers
These recent cases remind employers that inducement may be a factor that is considered by courts when determining a dismissed employee's notice period.
If an employee willingly leaves a secure job for a new opportunity, that employee has not necessarily been induced. Inducement generally involves conduct that goes beyond the ordinary degree of persuasion and “courtship” that occurs between an employer and a prospective employee in the recruitment process.
In considering whether an employer's recruitment methods amounted to inducement, courts will assess the reasonable expectations of both parties.
When inducement is established, courts may extend any common law reasonable notice period to which the employee is entitled in law, and thus, the wrongful dismissal damages payable by the employer.
However, not all inducements will carry the same weight.
The inducement factor is most significant in cases where the employee was enticed to leave secure long-term employment only to be terminated shortly after. The effect of any inducement tends to decrease significantly as the length of employment with the new employer increases. In one recent case, the Court found that inducement was not significant where termination occurred six years after the employee was induced to join a company.3
Inducement may also be less significant if the employee was actively looking for work when they were recruited to a new employer, did due diligence before accepting the position by conducting their own inquiry into the company, or has a great deal of professional mobility.4
In the absence of a bright line between ordinary persuasion and inducement, what can employers do to mitigate the risk?
Most importantly, employers should ensure that job offers include enforceable termination provisions which limit the employee's implied entitlement to common law reasonable notice of termination. Enforceable termination clauses oust the Court's discretion to increase the notice period on the basis of inducement.
Employers can also hedge against the risk of inducement by including probationary period clauses, provisions limiting the recognition of prior service to the minimum extent required by employment standards legislation, and express contractual acknowledgements that the employee was not induced to leave their former employer, as well as “entire agreement” provisions.
Footnotes
1. Miller v. Alaya Care Inc., 2025 ONSC 1028 (CanLII)
2. Lachapelle v. St. Laurent Automotive Group Inc., 2025 ONSC 1956
3. Singh v. Clark
4. Shelp v. GoSecure Inc.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
