The High Price of Enticement

In a recent article, Robert Smithson discusses the issue of "reasonable working notice" entitlements for short-service employees under common law, particularly focusing on situations where an employee is enticed away from stable employment to join a new employer.

The original version of this article can be found on Smithson Employment Law Corporation. 

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I’ve previously written on the topic of the common law “reasonable working notice” entitlements of short-service employees.  Suffice to say, most employers are taken aback to learn that terminated employees who had only been in the fold for a year or so can obtain damages for wrongful dismissal in the 6+ months range.

For a truly shocking experience, however, we have to add “enticement” into the short-service termination scenario.  When an employee is enticed to leave former employment to join a new employer and then his/her employment is terminated within, say, the first two or three years of the relationship, the price tag goes up quite dramatically.

What’s the Situation?

Generally speaking, for a finding of “enticement” to occur, the new employer must have taken some active steps to recruit the employee away from existing, stable employment.  That often takes the form of a recruiter going out into the marketplace to look for qualified candidates.

The candidate will generally be a person who was quite content in his/her existing employment situation and who was not actively looking for a new job.  Often, successive and increasing offers will be made to entice the person to accept new employment elsewhere.  It’s not uncommon for a substantial signing bonus to be offered and for the new employer to pay for relocation costs.

The individual, succumbing to the enticement, signs on with the new employer, resigns from his/her existing employment, and looks ahead to a grand and stable future.  Unfortunately, that isn’t always the way it plays out.

When that new employment comes to an end within the first few years – and there is no contractual termination provision in place - the employee’s lawyer will be looking for significant damages in lieu of “reasonable working notice”.

What’s the Solution?

The solution is quite simple, really.  The new employer should always make its offer of employment in the form of a binding employment agreement containing an enforceable termination clause.

Doing so ousts the common law of employment/wrongful dismissal, and entirely avoids the risk of enticement damages being awarded to the employee.  However, many employers still make the mistake of not regularly utilizing employment agreements drafted by a qualified lawyer.

Ferweda v. Mercer Celgar Limited Partnership

A recent decision of B.C.’s Supreme Court demonstrates the risk of enticing employees away from stable employment and of failing to impose an employment agreement on the relationship.  The Court captured the scenario…

[1]  The plaintiff, Gerald Ferweda, was employed by the defendant, Mercer Celgar Limited Partnership (“Celgar”), from April 23, 2018–September 22, 2020, slightly less than two-and-a-half years. On September 22, 2020, Celgar terminated Mr. Ferweda’s employment without cause. Mr. Ferweda worked as an operations specialist in a pulp mill owned and operated by Celgar in Castlegar, BC (the “Celgar Mill”). Prior to April 23, 2018, Mr. Ferweda held a similar position at a pulp mill owned by Catalyst Paper Corporation (“Catalyst”) in Duncan, BC (the “Crofton Mill”). In total, Mr. Ferweda worked for Catalyst or its legal predecessors for 27 years.

In early 2018, a recruiter working for Celgar, contacted Mr. Ferweda by email regarding a job at the Celgar mill in Castlegar.  Following an exchange of email communications between Mr. Ferweda and the recruiter, Celgar brought him to Castlegar to tour the facility and meet with some senior management staff.

Celgar’s representatives went to some lengths to assure Mr. Ferweda that his situation with Celgar would be improved as compared to his existing employment.  They took Mr. Ferweda out for dinner and paid for several nights in a local hotel and for all his travel expenses. 

In March, 2018, Celgar issued an offer of employment to him, which he initially turned down.  According to the Court…

[13]         Mr. Ferweda thought the original offer was attractive, but not sufficient to cause him to leave Catalyst. The pension benefit was slightly better. The paid vacation time was identical to Catalyst. The benefits were better than those at Catalyst. The base salary offered was $130,000, almost exactly what Mr. Ferweda was making at Catalyst.

Having communicated to Celgar that the offer wasn’t sufficient for him to leave his existing employment, Celgar upped the ante by increasing the proposed salary to $140,000.  Mr. Ferweda accepted that offer and then resigned his existing employment.

Critically, Celgar’s offer contained neither a probationary period nor a termination clause.  Both Mr. Ferweda and a Celgar representative testified that they viewed the job as a long-term hire.  Unfortunately, that didn’t pan out as the employment relationship was terminated by Celgar in September of 2020, as part of a downsizing.

On the topic of enticement (or “inducement”), the Court made the following findings.

[31]         In this case, I am satisfied that there was an inducement made by the employer on which Mr. Ferweda reasonably relied. Based on all the circumstances surrounding the creation of the employment contract, Celgar created an expectation on the part of Mr. Ferweda that the opportunity at Celgar was such that it would be advantageous to him to leave his secure long-standing employment and take a job which was expected to be long-term.

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[34]         Based on the totality of things said and done by Celgar at the time the employment contract was formed, Mr. Ferweda reasonably believed that he was being offered an opportunity to potentially end his career with Celgar, in a position which although identical to the one he was leaving, offered greater job satisfaction, and considerably better remuneration and benefits.

The Court then turned to the question of damages.  Taking into account Mr. Ferweda’s limited employment options and Celgar’s enticement of him to leave his former employment, the “reasonable working notice period” was determined to be 12 months. 

That’s $140,000 or so, plus legal costs, in damages payable to a former employee who had only been with Celgar for a couple of years.

A Tip to Avoid Such Outcomes

As noted, the first thing an employer should do, when hiring any employee, is insist on the candidate signing a binding and enforceable employment agreement (containing a termination clause) before the employment commences.  As with many potential pitfalls in the employment world, a properly-drafted employment agreement can provide an air-tight solution.

It seems to me that it’s much cheaper to pay an employment lawyer to produce a properly-drafted employment agreement than it is to pay out the sort of damages obtained by Mr. Ferweda.

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This item is provided for general information purposes only and is not intended to be relied upon as legal advice. Informed legal advice should always be obtained about your specific circumstances.