Inducement: The High Price of Termination

Inducement: More Than Standard Bardal Factors

When assessing an individual’s entitlements to notice (or severance pay) upon termination, there is often much more at play than just the standard “Bardal factors” – i.e. age, position, length of service. In determining what an employee is owed when terminated, our courts have long encouraged a contextual analysis. Everything from the timing of the termination, to the state of the economy, to the steps the company took to assist in a job search (i.e. the provision of a reference letter, etc.) will all carry some weight in determining what an employee is entitled to receive.

This contextual analysis may also include a look at whether or not the employee left secure employment to come and work for the new company, and what sort of efforts and/or representations were made by the company in order to make this happen (if any) – i.e. the common law concept of inducement.

High Cost of Firing an Induced Employee

In Rodgers v. CEVA Freight Canada Corp., the Ontario Superior Court affirmed the potentially high cost of a decision to terminate an individual’s employment where inducement from secure employment is a factor. In this case, Bruce Rodgers had been employed by Sameday Worldwide for a period of 11 years. In 2009, he Mr. Rodgers was approached by an employee of the defendant, CEVA Freight Canada Corp., about an opportunity that had arisen with CEVA. Mr. Rodgers went on to attend 7 interviews – including two that required him to be flown out to Houston, Texas, and one with CEVA’s Chief Executive Officer – and receive an offer of employment. Mr. Rodgers initially turned the offer down. Shortly thereafter, CEVA presented Mr. Rodgers with a revised offer, which included, among other things, a $40,000.00 signing bonus. Mr. Rodgers accepted this offer, and 3 years later, he was terminated.

In determining the length of notice that Mr. Rodgers was entitled to, the court concluded that there was “some measure of inducement” by the defendant which resulted in Mr. Rodgers leaving his employment with Sameday. This fact, in conjunction with the senior status of Mr. Rodgers’ prior position with CEVA, led the court to award Mr. Rodgers – an individual who had only been employed with the defendant for a period of 3 years – 14 months’ pay in lieu of notice of termination.

Interestingly, the court also suggested that had there been evidence that Mr. Rodgers had expressed some reticence at leaving Sameday Worldwide, and that specific representations were made to Mr. Rodgers regarding job security, the notice period would have been even higher.

This case is following the general, recent trend of providing short-service employees with longer periods of notice, and strongly indicates that where job security is implied (either through the method of recruitment or the offer of employment itself) by the employer, inducement may be found and the employer may be on the hook for a significant notice period.