ARTICLE 24 – INDUCEMENT

ARTICLE 24
INDUCEMENT

In Antidormi v Blue Pumpkin Software Inc., a 2004 decision of the Ontario Superior Court of Justice, the Plaintiff, “A.” had been employed as a Channel Sales Manager for a large software developer. She was one of the company’s highest achievers, winning awards and bonus incentives for her sales efforts. At the time the case arose, she was on track to earn salary and commissions for the year well into the six figure range.

A few months after joining the company, A. was contacted by a former colleague with news of an employment opportunity with Blue Pumpkin (“BP”), an American company seeking to build its sales team and develop the Canadian market. The colleague advised that she would be submitting A.’s name to BP’s V.P. Sales for consideration even though A. indicated that she was doing really well where she was and enjoying it there.

In the follow-up phone conversation with A., BP’s V.P. Sales addressed certain of A.’s concerns about the company and its products. A face-to-face meeting was agreed to even though A. indicated that she was not interested in changing jobs. At the meeting in Toronto, the V.P. Sales shared his vision for Canada and told A. that BP’s executives recognized Canada as having the potential to be its fastest growing market and were committing the necessary resources to facilitate its growth.

In the VP’s words, “the sky was the limit.” He represented that if A. proved herself in the Canadian market; she could fast track and pursues her goal of working in the global marketplace.

      A. did not accept the offer to join BP immediately. After researching the company, A. went out to California to meet with BP’s senior management including the company’s CEO who expressed complete confidence in his V.P. Sales and confirmed that this was a long-term opportunity. Upon further assurances that she would enjoy job security as long as she performed and that build the Canadian territory would take at least three to five years, A. agreed to her current employer of some 19 months and join BP.

At the outset, A.’s position was that of Account Executive. Within a few weeks, she was made Territory Managers – Canada and Latin America. Throughout her employment with BP, A’s performance was outstanding and consistently at or above assigned objectives. The V.P. sale repeatedly expressed satisfaction with BP’s work and further indicated that he anticipated she would have a solid and immediate impact on BP’s performance in Canada. Approximately five months after A. commenced employment with BP, the V.P sales was replaced by the company’s V.P. Worldwide sales. About a month later, A. was advised that she was being terminated as management has changed its focus. When A. protested about the promises which had been made to her and the impact the termination would have upon her family, BP would only say that A. might have changed her lifestyle.

At the wrongful dismissal trial, the Court determined that A. would never have left her stable and lucrative position with her former employer but for the misrepresentations from BP about job prospects and job stability. A.hed been employed by BP for six months at termination. The termination constituted a wrongful dismissal. The court took BP’s misrepresentations into account in awarding A. reasonable notice, otherwise referred to as wrongful dismissal damages, of 10 months. BP’s conduct at termination and following A’s termination led to n increase in the notice period/wrongful dismissal damages to 12 months. Based on A’s salary and expected bonuses/commissions over the notice period/wrongful dismissal damages, damages were fixed at $320,000.00.

The massage sent by the Court in Antidormi is clear. Inducement by a prospective employer to leave one’s present job may extend wrongful dismissal damages that would otherwise be awarded, and could well result in a period of notice exceeding the length of employment itself. In determining the impact of an alleged inducement, the courts will take into account:

  1. The position, remuneration and security enjoyed in the previous employment;
  2. Whether it was the employer or the employee who initiated contact with respect to the new employment and/or pursued the negotiations leading to the new employment;
  3. Representations made by the new employer as to the position, remuneration and prospect for secure employment and advancement at the new employment; and
  4. The length of service at the new employment.

If you have any questions related to wrongful dismissal damages or any employment law questions; it is always best to seek the advice of an employment lawyer.