Does aggressive recruitment of an employee impact the notice period if the employee is terminated?
Question: If we aggressively recruit an employee from another company, are we opening the door to an increased severance package if things don’t work out?
Answer: Yes, unless you limit your exposure through a well-drafted employment contract. Aggressively recruiting an employee to leave previous secure employment can have a significant effect on the reasonable notice period that a court may award in a wrongful dismissal case.
One of the factors courts consider in assessing notice is whether the employee was induced to “quit a secure, well-paying job … on the strength of promises of career advancement and greater responsibility, security and compensation with the new organization.” Inducement tends to lengthen the notice period for an employee dismissed without cause.
Inducement is the act or process of enticing or persuading another person to take a certain course of action. In a recent case, a court held that “encouragement” could be a form of inducement. The encouragement in that case had reached a level beyond that inherent in the normal hiring process because the persuasion came from two former colleagues and friends of the prospective employee who, unbeknownst to the employee, were to receive a substantial bonus if they successfully recruited her.
In assessing the effect of inducement on the notice period, a court will consider the degree of inducement. The classic example of inducement sees promises of job security, career advancement or other long term commitments.
Factors the courts will consider after finding inducement include whether the employee relocated, if the employee was a “willing seducee,” if the previous employment was insecure, if the employee was actively looking for a new position and the relative brevity of the new employment in relation to the length and security of the employee’s former employment.
However, there may be a point in the new employment relationship when inducement is no longer relevant to the notice period. One case held that an employee may have an inducement argument within up to four years of employment. However, another case took into account inducement after 14 years’ employment.
All that being said, there are ways in which you can limit liability for comments made during the recruitment process. Obviously, prior to the commencement of employment, you can enter into an employment contract which sets out the employee’s entitlement to a certain amount of notice in the event that the employee is dismissed. In addition, all contracts should contain a provision which states that the employee agrees the contract is the entire agreement and she is not relying on any representations absent from the contract.
In any event, during the hiring process you should avoid making promises such as job security or career advancement. If you must make such promises they should be made conditional — for example, based on performance. Your recruiting staff should be aware of the effect that promises or statements could have on future severance packages unless the employment contract is carefully drafted.
Brian Johnston is a partner with Stewart McKelvey Stirling Scales in Halifax. He can be reached at (902) 420-3374 or [email protected]
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Answer: Yes, unless you limit your exposure through a well-drafted employment contract. Aggressively recruiting an employee to leave previous secure employment can have a significant effect on the reasonable notice period that a court may award in a wrongful dismissal case.
One of the factors courts consider in assessing notice is whether the employee was induced to “quit a secure, well-paying job … on the strength of promises of career advancement and greater responsibility, security and compensation with the new organization.” Inducement tends to lengthen the notice period for an employee dismissed without cause.
Inducement is the act or process of enticing or persuading another person to take a certain course of action. In a recent case, a court held that “encouragement” could be a form of inducement. The encouragement in that case had reached a level beyond that inherent in the normal hiring process because the persuasion came from two former colleagues and friends of the prospective employee who, unbeknownst to the employee, were to receive a substantial bonus if they successfully recruited her.
In assessing the effect of inducement on the notice period, a court will consider the degree of inducement. The classic example of inducement sees promises of job security, career advancement or other long term commitments.
Factors the courts will consider after finding inducement include whether the employee relocated, if the employee was a “willing seducee,” if the previous employment was insecure, if the employee was actively looking for a new position and the relative brevity of the new employment in relation to the length and security of the employee’s former employment.
However, there may be a point in the new employment relationship when inducement is no longer relevant to the notice period. One case held that an employee may have an inducement argument within up to four years of employment. However, another case took into account inducement after 14 years’ employment.
All that being said, there are ways in which you can limit liability for comments made during the recruitment process. Obviously, prior to the commencement of employment, you can enter into an employment contract which sets out the employee’s entitlement to a certain amount of notice in the event that the employee is dismissed. In addition, all contracts should contain a provision which states that the employee agrees the contract is the entire agreement and she is not relying on any representations absent from the contract.
In any event, during the hiring process you should avoid making promises such as job security or career advancement. If you must make such promises they should be made conditional — for example, based on performance. Your recruiting staff should be aware of the effect that promises or statements could have on future severance packages unless the employment contract is carefully drafted.
Brian Johnston is a partner with Stewart McKelvey Stirling Scales in Halifax. He can be reached at (902) 420-3374 or [email protected]
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