Recruiting Considerations: The “Inducement” Factor

Termination is understandably not always at the forefront of employers’ minds when they are onboarding senior employees and management.

However, all employment relationships eventually conclude, and in the case of a termination without cause, employers are commonly required to provide pay in lieu of reasonable notice of termination (i.e., severance) to the departing employee. The amount of reasonable notice an employee is entitled to increases for longer term employees, but sometimes short-term employees who were induced away from existing stable employment are also entitled to significant amounts of reasonable notice. Considering this reality, employers should always be cognizant of their hiring and recruiting practices to avoid unintended consequences. A recent British Columbia case underscores this and clarifies the law surrounding when employers can be said to have “induced” potential employees into working for them, which can result in a greater damages award than would normally be applicable. 

In Mercer Celgar Limited Partnership v Ferweda, 2025 BCCA 120 (“Ferweda”) the employee was a chemical engineer who had worked as an operations specialist at a pulp mill for 27 years. A recruiter reached out to the employee through LinkedIn and arranged an all expenses paid visit to the potential employer’s pulp mill. After the visit and some salary negotiation, the employee agreed to resign from his position and commence employment with the employer in substantially the same role but with a $10,000 increase in salary. Two years later, he was terminated without cause. The employee argued he was entitled to a significant period of reasonable notice due to the fact he was induced away from his employment of 27 years. 
  
At trial, the British Columbia Supreme Court found the following circumstances relevant to the question of whether there was an inducement: 
  
  1. The employer recruited the employee who had not been actively looking for a different job;
  2. The employer made the job attractive to the employee through the all-expenses paid visit;
  3. The employer highlighted reasons that employment with them would be superior to the employee’s then-current employment;
  4. The employer specifically told the employee that they generally hired for the “long term” and otherwise implied that they would be hiring the employee for a long-term position; and
  5. The employee did not accept the first offer but only took the job after the employer offered an increased salary.
Because of these circumstances, the trial judge increased the notice period the employee was entitled to from five to twelve months’ notice, or from approximately $58,000 to $140,000 based on the employees’ salary.
  
On appeal, the Court clarified that inducement is another factor – in addition to the oft-cited list of Bardal factors – that aids in determining the length of a given employee’s reasonable notice period entitlement. The Court also noted that inducement may arise in many different ways and does not only involve aggressive “luring” efforts undertaken by an employer. Tacit persuasion, implied assurances of job security, and increased compensation were accepted by the Court as circumstances that can constitute inducement. Despite the employer’s argument that the employee was as equally invested in the new employment relationship, the Court of Appeal agreed the employee had been induced and declined to interfere with the increased reasonable notice period entitlement of 12 months awarded by the trial judge.  

The decision in Ferweda clarifies that findings of inducement may increase employees’ notice period entitlements even in the absence of aggressive “luring” efforts, and even where employees are equally interested in the new employment relationship. When recruiting senior employees and management, employers should be especially aware of the significant liability that may attach where they can be said to have “induced” an employee, even if that employee is terminated after only a short period of service. The indicia relied on by the Court in Ferweda provides some guidance as to when this “inducement” may arise.
  
The case also serves as a reminder to employers that a carefully drafted and enforceable termination clause which sets out what notice or pay in lieu of notice an employee is entitled to receive in the case of a termination without cause can help eliminate the risk of being found to owe significant amounts of reasonable notice because of inducement efforts. It is always advisable for employers to have legal counsel review employment contracts to ensure compliance with the law and to avoid scenarios like that in Ferweda.

McLennan Ross regularly provides legal advice to employers in respect of hiring and terminations, including assessments of whether certain recruiting efforts could be considered inducement. If you have questions about the topic above, or any other employments matters, please connect with our Labour and Employment Team. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.