Employee seeks damages after company terminates him following economic downturn just months after hiring
Ontario's Superior Court of Justice recently dealt with a wrongful dismissal case involving a worker who claimed inadequate severance after being terminated following less than eight months of employment.
The worker had left a 14-year position at his previous employer to join the new company, arguing he was induced to make this career change through various representations about job security and advancement opportunities.
The worker's central argument focused on alleged promises made by management during the recruitment process. He claimed he was told he would become a lead hand within a year, that the company did not lay off employees, and that he would earn significantly more than in his previous position.
These representations, he argued, constituted inducement that should entitle him to enhanced notice beyond the statutory minimum of one week's pay.
Brief employment sparks inducement dispute
The worker had been employed at his previous machining company for 14 years when a coworker told him that another machining company wanted to hire him as part of a new division.
The worker believed this coworker was employed by the potential employer after seeing business cards with the coworker's name and viewing his LinkedIn profile, which stated he had been employed there since 2020.
A manager with the company contacted the worker in April 2023 to arrange a meeting. On 26 April 2023, the worker met with the manager and the company's vice president.
The worker explained he had been at his previous employer for 14 years, but overtime opportunities had decreased, making him interested in part-time work.
The vice president said part-time work wasn't available, but the manager told the worker that if he learnt a program called Mastercam, part-time opportunities might become available.
The worker completed Mastercam training on his own initiative. The employment opportunity materialised when the worker faced a temporary layoff from his previous employer in late May 2023.
Having experienced five or six similar layoffs during his tenure there, he was familiar with these periodic work interruptions. On 9 June 2023, the worker agreed to start part-time employment at $28 per hour beginning 12 June 2023.
Management representations
According to the worker's evidence, the manager made several significant statements during the June meeting that would later become central to his inducement claim.
The worker said the manager told him he would like the worker to become a lead hand within a year and that the company did not lay off employees.
Most significantly, the manager allegedly said that if the worker agreed to work full-time, the company would pay him more than he was earning at his previous employer.
In late August 2023, when the worker learnt he would be called back to his previous employer, he advised the manager and meetings were arranged involving the vice president. On 28 August 2023, the worker was offered full-time employment at $30 per hour.
He told management he was earning $30 per hour at his previous employer and had been told he would earn significantly more. The following day, he was offered employment at $35 per hour plus benefits, which he accepted on 30 August 2023.
The employer's version of events differed significantly regarding these alleged representations. In cross-examination, the manager "denied holding out the prospect of the [worker] becoming lead hand and he did not say that the [worker's] future would be secure if he commenced employment with [the employer]."
He did acknowledge telling the worker that the company "historically tried not to lay off employees."
Competing versions of recruitment promises
The court noted an important discrepancy regarding the coworker's employment status. While the worker believed the coworker was an employee based on business cards and LinkedIn information, both the vice president and manager testified "that [the coworker] at no time was an employee of [the employer]."
The manager said he only learnt weeks before the trial that the coworker had business cards showing he worked for the company.
Neither party obtained an affidavit from the coworker, and he was not called as a witness at trial.
The court found it reasonable to assume that statements attributed to the coworker in the worker's affidavit were as favourable or more favourable to the worker than evidence would have been if the coworker had testified.
The court stated there was no merit to the suggestion that an adverse inference should be drawn against the worker because of the failure to call the coworker as a witness.
This finding was significant because it meant the court would consider the worker's version of events regarding what the coworker had told him about employment prospects and company culture.
Economic downturn leads to termination
On 2 February 2024, less than six months after starting full-time work, the worker's employment was terminated without cause due to what the employer described as a financial downturn. The employer paid one week's severance as required by the Employment Standards Act.
The employer's financial difficulties were well-documented through internal sales figures showing dramatic declines in orders from the company's two largest customers.
Sales to one major customer fell from $1,936,828 for the fiscal year ending 30 September 2022 to $676,765 for the fiscal year ending 30 September 2023. For the five-month period from October 2023 to February 2024, sales to this customer were only $353,902.
Purchase orders totalling $1,661,500 from another major customer were placed "on hold" until at least September 2024 and possibly until early 2025.
Following his termination, the worker secured a position with another company on 26 February 2024, earning $30 per hour with an increase to $31 after three months. He was later laid off in November 2024 but recalled in February 2025. Throughout these employment changes, he continued working part-time for his original employer.
Legal framework applied to inducement claims
The court applied the established legal test from Firatli v. Kohler Ltd., which identifies seven factors courts should consider when determining if a terminated employee was induced to leave previous employment.
These factors examine the reasonable expectations of both parties, whether the employee sought out work with the prospective employer, and whether there were assurances of long-term employment.
The court found that "the reasonable expectations of both parties were that there would be a long-term employment relationship" but noted the worker "was seeking alternate employment options due to his concern about [his previous employer] closing or being sold."
This finding was significant because it suggested the worker's motivation for changing jobs wasn't based solely on the employer's representations.
The evidence showed the worker had legitimate reasons to be concerned about his future at his previous employer. During his 14-year tenure, he had been temporarily laid off five or six times, and overtime opportunities had decreased.
The court noted that the manager "stated that it was the [worker] who said he was interested in exploring other potential employment options."
Inducement arguments fail judicial scrutiny
The worker's completion of Mastercam training on his own initiative was seen as evidence of his eagerness to improve his employability.
The court observed this "indicates he was anxious to improve his skills so as to make himself more employable by [the employer]." This voluntary skill development undermined his claim that he was reluctantly induced to leave secure employment.
The court concluded the employment relationship represented a typical mutual interest between a prospective employer and employee rather than improper inducement.
Justice Goodwin stated: "This was not an inducement to an otherwise reluctant recruit to leave his current employment but was part of the negotiation process during which the [worker] sought to increase his income by accepting an offer of employment from [the employer]."
The court applied the well-established Bardal factors for determining reasonable notice periods.
In Bardal v. The Globe and Mail Ltd., the court established that "the reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment."
Final damages reflect employment duration
Applying the Bardal factors, the court considered that the worker was a machinist paid hourly wages who wasn't in management. His employment was brief - less than six months full-time and less than eight months including part-time work.
At 35 years of age, he quickly found alternative employment, suggesting similar positions were readily available. The court awarded 12 weeks' notice based on these circumstances.
The worker's claim for punitive damages based on alleged bad faith hiring was unsuccessful. The court concluded:
"I find that no misrepresentations were made to [the employer]. There was no evidence that the [worker] made any inquiries about the status of [the employer's] sales."
While sales to one major customer had declined by September 2023, problems with the other customer didn't emerge until January 2024, after his hiring.
After considering all circumstances, the court calculated total damages at $16,800 for 12 weeks' notice at $1,400 per week. However, after accounting for one week's severance already paid ($1,400) and income earned at the new employer ($10,800), the net award was $4,600 plus prejudgment interest.
The court stated: "Taking these factors into consideration, I come to the conclusion that the [worker] was not induced to leave his employment with [his previous employer] such that he should be entitled to an enhanced period of notice."
