Poaching workers from other employers can help a business, but inducing them to leave secure jobs has legal risks
Unless it refers to eggs or salmon, the term “poaching” usually has negative connotations. It conjures up images of clandestine hunters shooting down endangered species of animals. For some, it can generate similar imagery in a business context, with recruiters serving as the hunters and the animals in this scenario being star employees.
Of course, from the perspective of a company doing the poaching, landing top talent with the added benefit of depriving a competitor of that talent can bring big benefits to the organization. In fact, nearly three-quarters of hiring professionals say they have poached an employee and almost six out of 10 say that poaching is ethical even if the employee was essential to the other company, according to a survey.
Poaching may not only benefit companies who are successful at it, but it might be necessary in a tight labour market. However, if a company is going to go that route, it also risks the possibility of having to provide more notice of dismissal or pay in lieu thereof down the line if things don’t work out, because of inducement.
In employment law, inducement refers to an employer encouraging or luring an employee who has secure, regular employment to leave that employment to join its own workforce. Often, if an employee who was induced to leave secure employment then gets terminated from their new job, the new employer is responsible for providing additional notice of dismissal to help make up for the likely larger notice entitlement the employee would have had with their previous employer. While the amount of extra notice can vary depending on the circumstances, it can be significant.
For example, in its 2004 decision Egan v. Alcatel Canada Inc., the Ontario Superior Court of Justice awarded nine months’ notice — later upheld by the province’s Court of Appeal — to an employee who had only worked for Alcatel Canada for less than two years, because the company had induced the employee to leave his previous employer, where he had worked for 20 years. Four years later, the B.C. Supreme Court awarded a worker damages equal to 10 months’ notice, even though the worker hadn’t even completed a six-month probation period, because the worker had moved from a secure job in the U.S. and relocated to Vancouver for the position: see Tanner v. Great Canadian Gaming Corp.
Another B.C. case featured an employee with six months’ service getting a relatively lengthy amount of notice compared to his tenure. In Greenlees v. Starline Windows Ltd., the employee was awarded six months’ notice after Starline Windows, a window company in Surrey, B.C., offered him a job at a time when the employee wasn’t looking to leave his current job. Starline depicted its vision of significant commissions and growth in the company, which convinced the employee to join the company. However, things weren’t what he expected and many of the promises didn’t pan out. Although the vision presented to the employee was “based on forecasts and were not guarantees” that were part of the employment agreement, it still was “bait” that induced the employee, said the B.C. Supreme Court.
The above case raises another issue about aggressive recruiting. While a company may not directly try to lure a worker from another employer, if it misrepresents the prospective job, it could still be on the hook for inducement liability. In Queen v. Cognos Inc., an Ontario company told a job candidate that he would be part of the development of a new line of software and staff involved with it would double within the next few months. However, development funding for the software and the job had yet to be approved. Two weeks after the worker left his old job, relocated from Alberta, and started the new job, senior management decided not to approve the funding, resulting in the worker being reassigned and eventually fired.
Courts at various levels, including the Supreme Court of Canada, found that the company had misrepresented the nature of the job and induced the worker to leave his secure job in Alberta, awarding the worker more than $67,000 for his brief tenure.
However, employers who encourage workers to join their team at the expense of another company aren’t always liable for inducement damages. In Nagribianko v. Select Wine Merchants Ltd., the Ontario Divisional Court found there was no inducement when a company recruited a worker but clearly told him that he would be starting with a six-month probationary period. The worker was dismissed before the end his probation, but the court found that the worker understood that “the nature of the employment relationship during probation is tentative” and the worker knowingly took a gamble that he would pass the probationary period when he left his previous employment.
Another element of inducement is that the worker’s previous employment has to actually have been secure and long-term. A more recent case, Passey v. Motion industries (Canada) Inc., involved a fired Alberta worker with just over two years of service claim four to six months’ notice because he left his previous job to join the company. However, the worker had only worked at the previous employer for six months and decided to leave for the better benefits, pay, and advancement opportunities at the new company. The good, informative recruitment efforts of the new company didn’t cross the line into inducement, said the court.
Poaching employees can be good news or bad news, depending on the side you are on, but for those doing the poaching, it’s a good idea to be aware of the effects it could have if the time comes to terminate the employment relationship. If all the risks aren’t considered, an employer could end up shooting itself in the foot.