Canadian Employment Law Today

October 11, 2017

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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Canadian Employment Law Today | 3 Canadian HR Reporter, a Thomson Reuters business 2017 Cases and Trends Employee fired before first day of work awarded 6 weeks' notice Employer changed its mind but contract said probationary period started on employee's first day on the job BY DAVID MASTER SOMETIMES, it becomes evident fairly quickly that a new employee isn't going to work out. But can an employer decide that before the employee even starts work? In Buchanan v. Introjunction Ltd., an em- ployer retracted a written offer of employ- ment about two weeks after it was signed, but prior to the employee's first day of work. As a result, the employee commenced an ac- tion for wrongful dismissal. Colton Buchanan, 27, was set to earn an annual salary of $125,000 with Introjunc- tion — a federally incorporated company in the high-tech industry — held a certificate in new media design and web development and had been in the field of web design for more than five years. He was not recruited or solicited by Introjunction, although he did leave secure employment at a digital media company to join the company. e key issues in this case were: • Did the employer's retraction of the exe- cuted employment agreement constitute a wrongful dismissal entitling the employee to damages in lieu of reasonable notice? • If the employee was entitled to reasonable notice, what is the appropriate notice pe- riod? Retraction and probationary periods e law is clear that absent a contractual provision to the contrary, an employee who is terminated without cause is entitled to reasonable notice or damages in lieu of rea- sonable notice. is principle stands wheth- er or not the employee has actually begun working. In other words, retraction of an executed employment agreement is akin to a termination. erefore, the central issue in the case was whether Introjunction could rely on the pro- bation clause in the employment agreement with Buchanan to negate its obligation to pay damages in lieu of reasonable notice. In B.C. and Ontario, employers who insert clear probation clauses into employment agreements retain the flexibility to terminate an employee without notice or cause for up to three months. In that regard, Introjunction argued that it must be able to rely on the probation clause because it would be illogical for the em- ployee to have greater rights before, rather than after, he commenced work and that the probationary clause granted it unfettered discretion to terminate Buchanan without notice or cause. However, the court found that Introjunc- tion could not rely on the probation clause and was obligated to pay damages in lieu of reasonable notice. It decision was based on two key reasons. Probationary period commenced on first day of employment. e court ex- plained that on its face, the employment agreement clearly stated that the three- month probationary period began on Nov. 1, 2016, which was the employee's first day of scheduled work. However, Buchanan, who executed the agreement in mid-October, was terminated on Oct. 29. As a result, the court found that the probationary period not to be in force at that time and it could not be relied on for this reason. Purpose of probationary periods. e court also explained that had the probation clause applied, its decision would have been the same because probation clauses do not grant employers unfettered discretion to ter- minate without notice or cause. It affirmed the enduring principle that the purpose of the probationary period is to permit the em- ployer to engage in a good-faith assessment of the employee's suitability for the job. In this case, Introjunction retracted the offer simply because it changed its mind about its business and staffing needs. e reasonable notice period Buchanan sought a reasonable notice pe- riod of four months, while Introjunction argued for two weeks to one month. e court explained factors in favour of a longer notice period were the nature of the position, high salary, and the fact Buchanan had left secure employment to join Injunc- tion. Factors in favour of a shorter notice pe- riod were the precariousness of the position, availability of similar employment and, of course, length of service. e court, without saying much more than taking the above into consideration, settled on six weeks' pay in lieu of reasonable notice as the appropriate notice period. Despite the court's brief analysis regard- ing the appropriate notice, it is noteworthy because while length of service is only one factor ordinarily considered by courts, the notice period is still relatively long. One possible explanation is that in this case, the employee was successful in finding alternate employment six weeks later and the court found his mitigation efforts to be reasonable. erefore, given the purpose of reasonable notice — essentially make the employee whole for a reasonable amount of time until she is able to secure alternate employment — six weeks' reasonable notice makes sense. It is also noteworthy because generally, courts will cite inducement by an employer as a factor contributing toward a higher no- tice period. ere was no dispute that the employee was not induced and simply left secure employment, but the court still found this to be a factor in support of an increased notice period. Tips for employers It would be misguided for employers to rely on this decision as justification to modify their employment contracts to extend the application of probation periods to the date the employee executes the employment agreement. While it would likely overcome the first hurdle in this case, unless some- thing drastic happened between the time of execution and employment affecting suit- ability — such as finding out the employee lied about credentials for the job — a court would likely find that the employer failed in its duty to act in good faith and still award damages. In that regard, a decision released just a couple of months prior from the same court, Ly v. British Columbia (Interior Health Au- thority), offered some guidance to employ- ers on factors it will consider in determining whether the employer acted in good faith The employment agreement clearly stated that the 3-month probationary period began on Nov. 1, but the worker was fired Oct. 29. WORKER on page 7 »

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