Was it inducement? How to avoid wrongful dismissal claims

When Canadian employers set out to woo senior talent from comfortable, well-paid jobs, they’re often thinking about succession planning and competitive advantage — not what will happen if that hire is dismissed two years later.  

As a recent Ontario Supreme Court decision shows, once an employee argues they were induced to leave secure employment, a straightforward termination can turn into a disputed, credibility-heavy wrongful dismissal case, with potentially longer notice periods and bonus claims at stake. 

Employment lawyer Faraz Kourangi of Williams Law says inducement is not a binary on-off switch in Canadian wrongful dismissal law, but rather a “spectrum, based on the full recruitment context.” 

For employers, that spectrum runs from simply hiring someone who was already actively jobhunting, to aggressively pursuing a candidate who was not looking to move and felt secure where they were.  

As Kourangi explains, where a specific situation falls along that line can affect how long a court thinks it should take that person to find comparable work after termination. 

The central role of termination clauses 

In the Campbell case, the employee says she left a senior role with a $180,000 base salary and guaranteed bonus structure after being contacted by a recruiter who offered her similar employment terms. The new employer terminated her employment without cause nearly two years later, providing her two weeks’ pay in lieu of notice plus $3,323 of vacation pay.  

According to Kourangi, employers often look to contractual language to manage inducement risk. But there are limits to what contracts can achieve, particularly around inducement-related language in employment contracts, as opposed to termination clauses; at the end of the day, context will matter more. 

“Those [inducement] clauses are not determinative. Courts won't ignore what actually happened,” he explains.  

“A court would look at the situation more holistically, so they would consider who initiated contact … how persistent was the recruitment, did the employer make assurances about job security, growth, long term opportunity? The fact that you have this no inducement clause isn't necessarily going to shield you from an inducement claim.” 

For Kourangi, one of the key risk management lessons for employers is that enforceable termination clauses often do more heavy lifting than inducementrelated contract language. 

“If you have a strong, enforceable termination clause that you can rely on, the employee is less likely to pursue a wrongful dismissal claim to begin with,” he says.  

“There's nothing to tack their inducement claim onto.” 

Recruitment practices that increase or reduce inducement risk 

Beyond contracts, the recruitment process itself can either mitigate or amplify inducement risk. The facts of the Campbell case are familiar in many sectors, says Kourangi. This is where training becomes an important risk-mitigating factor, he adds – when recruiters and managers can be made aware of where reasonable practices cross the line into inducement. 

“You can advertise the role that you're recruiting for and engage in ‘sales talk’,” he says. “You can’t really go beyond that and make assurances about job security, about growth and advancement in the new role.” 

This distinction can be particularly important when the candidate is being approached cold and is not actively looking. Every case will be different, he adds, but can offer one rule of thumb, says Kourangi: “You'll want to avoid saying, ‘We offer larger bonuses at this company than you're currently receiving’ or ‘We offer better opportunities for career advancement than what you currently have.’” 

Those kinds of direct comparisons, he notes, can later be used as evidence that an employer enticed someone out of stability with specific promises. 

Time and space and front-end mitigation 

In addition to recruitment tactics, Kourangi urges employers to consider notice exposure at the front end, rather than when it becomes necessary to end an employment relationship earlier than anticipated – when a senior candidate is leaving a long-term role with strong compensation, it may be appropriate to factor a potential inducement argument into severance budgeting and risk assessment. 

“They should also consider the likelihood that a court will enforce the termination clause in their contract,” HE SAYS. 

Another area of risk is the timing and pace of decisions. Kourangi stresses that pressure tactics may work in some scenarios, but can also look like inducement when scrutinized later by decision-makers in court.  

For HR, that can translate into offer processes that clearly set out response timelines, avoid repeated followups that could be characterized as pestering, and document that the candidate had an opportunity to obtain advice before signing on the dotted line. 

“Don’t put pressure on the candidate to accept the role,” Kourangi says. 

“If you end up making an offer, they should be given a reasonable period of time to consider it.”