Inducement and Termination: What Employers Need to Know – Lessons from Miller v. Alaya Care Inc
Employers should be mindful of the legal risks associated with recruiting employees away from secure, long-term positions. Where an employee is induced to leave stable employment to join a new organization, courts may take that inducement into account when assessing reasonable notice upon termination.
In Miller v. Alaya Care Inc., the Ontario Superior Court awarded an employee 14 months’ reasonable notice despite only seven months of service with the employer. The Court found this to be appropriate because the employee had been induced to leave secure, long-term employment to accept the new role.
The decision underscores that even short-service employees may be entitled to substantial reasonable notice where inducement and other contextual factors are present.
Background
Prior to joining Alaya Care, Ms. Miller had been employed for approximately twelve years as a senior executive.
Ms. Miller was initially approached by Alaya Care’s co-founder through LinkedIn and had subsequent discussions with senior members of the leadership team.
Importantly, Alaya Care provided a written indemnity for Ms. Miller‘s legal fees if her former employer pursued legal action against her for joining a competitor. The parties ultimately entered into a written employment agreement on December 15, 2021.
Ms. Miller was terminated seven months later.
Inducement – Factors Considered by the Judge
In her wrongful dismissal claim, Ms. Miller alleged that she had been induced to leave her former employer and argued that her prior twelve years of service should be considered in assessing reasonable notice, in addition to her seven months at Alaya Care.
In assessing inducement, Justice Carroccia considered the following factors:
The reasonable expectations of both parties;
Whether the employee sought out work with the prospective employer;
Whether there were assurances of long-term employment;
Whether the employee did due diligence before accepting the position by conducting their own inquiry into the company;
Whether the discussions between the employer and prospective employee amounted to more than the persuasion or the normal “courtship” that occurs between an employer and a prospective employee;
The length of time the employee remained in the new position, the element of inducement tending to lessen with the longevity of the employment; and
The age of the employee at termination and the length of employment with the previous employer.
Applying these factors, Justice Carroccia concluded that the discussions initiated by Alaya Care went beyond a typical recruitment process and amounted to inducement. The Court noted that Alaya Care made specific representations about Ms. Miller’s role in growing the company, inquired in detail about her compensation, and went so far as to indemnify her against potential litigation from her former employer. These steps elevated the recruitment efforts beyond ordinary persuasion and went beyond the “normal courtship between an employer and a prospective employee”.
Takeaways for Employers
This decision highlights the fine line between recruitment efforts and legally significant inducement. Employer should consider the following:
Be mindful when recruiting a candidate that has long-term, secure employment.
Indemnities and protective promises may support a finding of inducement, as it did in this decision (i.e., the covering of legal fees).
Ensure termination clauses are carefully drafted and enforceable. However, even valid clauses may not fully insulate employer’s against inducement-related arguments, which may therefore impact notice assessments.
Contact a member of our team for guidance on recruitment and offers of employment.
