Situation was 'typical courtship' between prospective employer and employee: lawyer
“Inducement is a word that we see thrown around a lot where employees sometimes say that just because they leave a position for a new one, it means that they were induced. You have to do some deeper digging into it.”
So says employment lawyer and workplace investigator Samantha Sutherland of Turnpenney Milne in Toronto, after an Ontario court found that an employer didn’t provide enough termination pay to a worker it fired without cause after a few months, but it also didn’t induce the worker or hire him in bad faith during a period of declining business.
The worker, 36, was a machinist working for another employer in early 2023 when a co-worker told him that XL Tool, a manufacturer of automotive stamping dies and production stampings in Kitchener, Ont., wanted to hire him. The worker believed that the co-worker worked for XL Tool because he had business cards and a LinkedIn profile saying he had been employed with XL since 2020. However, the co-worker wasn’t actually on XL Tool’s payroll and the company wasn’t aware of his cards and LinkedIn profile – he just knew XL’s owner.
On March 3, the worker went with the co-worker to XL’s premises, where the owner gave him a tour and told the worker that the company was hiring. The worker wasn’t interested in leaving his current employer, but said he was interested in working part-time for XL.
On April 24, a manager with XL texted the worker asking if he would meet with him. The worker agreed and, two days later, he met with him and XL’s vice-president at XL’s facility. The worker reiterated that he was interested in working part-time with XL, as overtime opportunities had decreased at his current employer. He was told that part-time work wasn’t available unless he learned a particular computer program.
On May 6, the worker advised XL that he had completed training on the program.
Employment offer
In late May, the worker’s current employer advised that he was going to be laid off in mid-June for one or two months, which wasn’t uncommon as the worker had been temporarily laid off five or six times previously during his 14 years of employment. On June 9, the worker met with XL and agreed to part-time employment. The company also said it didn’t lay off employees and the worker would earn more than he was at his current employer if he worked full-time at XL.
The worker’s regular employer informed him in late August that he would be called back soon, so he met with XL management, who offered him a full-time position at the same rate. The worker mentioned he had been told he would make more with a full-time position at XL, so the offer was revised with a higher pay rate. The worker accepted and, on Aug. 30, resigned from his position with his other employer after 14 years of service, although he continued to work part-time for it.
At the time, XL was experiencing a reduction in work from its two largest customers.
The worker was employed full-time with XL for five months until Feb. 2, 2024, when the company terminated his employment without cause due to the reduction in work and revenue, including a delay in work from one of the largest. He received termination pay equal to one week’s pay. Several other employees were also laid off.
The worker inquired with his previous employer about coming back full-time, but there was nothing available. He found a new job with similar pay on Feb. 26.
Termination pay, inducement claim
The worker commenced an action for breach of contract on the basis that his termination pay was inadequate and XL had induced him to leave long-term, secure employment. He also claimed that XL acted in bad faith when it hired him full-time knowing that its sales were decreasing and it could lead to a layoff, claiming punitive damages.
The court considered whether the worker was induced to leave secure employment, noting that the co-worker who told him that he was employed by XL wasn’t actually with the company. The court preferred the evidence of XL management over hearsay statements attributed to the co-worker.
The court found that the worker’s previous employment wasn’t secure, pointing to multiple prior layoffs and reduced overtime. It was the worker who sought out alternate employment due to the reduced overtime and later the layoff, and he undertook additional training on the computer program on his own initiative, the court said. When XL increased the wage rate in its offer of employment to the worker, it was part of a negotiation process, not an inducement to leave secure employment, said the court in finding that the discussions between the worker and XL were part of the “usual courtship” between a prospective employer and employee – much of which took place while the worker was already working part-time for XL.
The court also found that both parties expected a long-term employment relationship and XL’s statement to the worker that it didn’t lay off employees wasn’t an assurance.
The concept of inducement exists on a continuum, according to Sutherland.
“On one side of the continuum, there's being unemployed and anxious for work, which wouldn't lead to an inducement; and then on the other side, there's someone who's securely and happily employed, not desiring to leave, and they're approached by a prospective employer - that would lead more towards inducement,” she says. “In this case, the court found that this situation was a typical courtship situation between a prospective employer and an employee, with mutual interest in entering into this relationship.”
Short-term employee
However, one factor that could have tipped the balance towards inducement is the worker’s short time with XL, says Sutherland.
“One of the factors that would lessen the element of inducement is the longevity of employment,” she says. “And the employer did reach out a few times, which is something that could lead towards inducement, but balanced with the other factors, where the worker was also seeking out the work and expressed that he wasn't in a secure employment relationship, tips the scale in favour of not finding inducement.”
In determining the reasonable notice period, the court considered the character of the worker’s employment as a non-managerial employee, five months of full-time employment and less than eight months in total, his relatively young age at termination, and the fact that he found similar employment quickly. The court determined that a reasonable period of notice was 12 weeks.
“Twelve weeks isn’t a long notice period, but when you think about the fact that it’s almost a third of the worker’s employment with XL Tools, it's actually disproportionately longer,” says Sutherland. “And that's a bit of a trend that we've seen in some case law where short-term employees get disproportionately longer notice periods than long-term employees - part of me thinks that it’s because it might be a bit harder to find employment if you have an eight-month stint on your resume, as prospective employers might be asking questions about it.”
No bad faith
As for the worker’s argument that XL acted in bad faith by hiring him during a period of declining sales, the court found no misrepresentation or malicious conduct by the company at the time of hiring or termination. The worker’s punitive damages claim was dismissed.
“At the end of the day, an employer is entitled to hire somebody even if sales are decreasing,” says Sutherland. “It might have turned out differently if the employer misrepresented things and told him that sales were going up, but the court didn't find the high threshold of punitive damages was met.”
The court ordered XL to pay the worker wages equivalent to 12 weeks’ notice less the one week’s termination pay and the income he earned at his new employment during the 12-week notice period. The total damages owing to the worker was $4,600 plus prejudgment interest.
