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Inducement of an Employee: Risks and Damages

Whitten and Lublin | Jan 09, 2017

Inducement: When pursuing an employee that works for another company, it is important to be mindful that this employee would be sacrificing a number of employment benefits by leaving their employer. This generally includes seniority, potential career advancements with their former employer, job security, benefits and so on. If recruiters are very persistent and aggressive towards an employee of another organization, or use promises such as career advancement, security, or higher pay, then this will be seen as inducement. The law seeks to protect individuals being induced by holding employers liable if the employee is terminated unjustly or too quickly. Thus, when recruiters focus on attracting talent from another organization, employers should be aware of the potential risks.

Risk 1: Increased damages through notice pay

This is problematic an unjust dismissal or constructive dismissal claim. In these circumstances, the employer will owe the employee pay for damages through increased notice pay as a result of the inducement. (Notice pay are damages owed to place the employee in a similar position had he/she not been terminated).

Risk 2: Damages for Misrepresentation (moving costs)

Another concern for employers should be whether the inducement was accompanied by a misrepresentation of the employment offer. The key is to be completely honest about the available position. If certain promises are made, such as advancement, but it is known that such promises are only possible with a budgetary approval, this information must be given before the candidate is hired. If a misrepresentation is made, the employer will be liable for any moving costs the employee incurred in addition to the amount owed through increased notice pay. Of course, this is only an issue if the employee is terminated undeservingly (i.e. termination without just cause) or too quickly. Nonetheless, employers should take the necessary steps to ensure their recruiters are fairly representing employment opportunities to potential candidates.

Factors used to Determine if Inducement Occurred

If the employer is able to show that the employee was not induced or if the employment lasted several years, then it is less likely that damages will be awarded. In summary, some of the factors to determine whether inducement occurred are:

  1. Whether the former job was secure
  2. Whether the employee accepted the offer while there were other better offers available
  3. Whether the employee had to move as a result of accepting the position
  4. Whether the employee was an owner of a business prior to inducement

If you are an employee and feel you have been induced and now find yourself unemployed after a short period, please contact an employment law expert to ensure you are compensated fairly. Employers are also encouraged to seek legal advice for any concerns regarding the risks mentioned above.