In a recent decision, the Ontario Superior Court of Justice awarded a plaintiff 14 months of reasonable notice pay despite the employee only having worked for the company for less than 3 years.

As of 2009, the plaintiff, Bruce Rodgers, was the president of a transportation company where he had been working 11 years. In September of 2009, Rodgers was recruited by the defendant company, CEVA Freight Canada (CEVA), to become Country Manager for its Canadian Operations. CEVA’s recruitment and interview process included 7 interviews, two flights to Houston and an interview with the Chief Executive Officer. Rodgers initially turned the job down but CEVA upped the salary offer and included a signing bonus of $40,000 in its second attempt to lure him away from his current position. The offer also included a number of additional perks, as well as an Equity Plan that Rodgers was required to partake in to demonstrate his long-term commitment to CEVA. Rodgers accepted the offer and borrowed $102,000 to make the necessary investment.

Slightly less than three years into his role with CEVA, Rodgers was terminated without cause. At the time of termination, CEVA paid Rodgers two weeks’ salary in lieu of notice, minimal severance pay and outstanding vacation pay. The termination provision in the employment letter read:

“[y]our employment may also be terminated by our providing you notice, pay in lieu of notice, or a combination of both, at our option, based on your length of service and applicable legal requirements.”

CEVA argued that Rodgers should be entitled to damages arising from the termination of his employment, but such damages should be tempered by the “length of service” as emphasized in the employment agreement.

The Court disagreed with CEVA’s position and concluded that the appropriate notice period was 14 months and awarded Rodgers $345,985, inclusive of his pay received by way of mitigation.

The Court reasoned that while length of service is a consideration in determining an employee’s reasonable notice period, it should not be given disproportionate weight. In particular, the Court focussed on CEVA’s inducement and recruitment of Rodgers away from an otherwise secure position. Another factor the Court considered was CEVA’s Equity Plan Rodgers needed to partake in. The Court held that the required investment implicitly suggested that Rodgers was about to join CEVA for the long haul. Other factors that contributed to a longer notice period included his age, position in the company, ability to find a similar position and CEVA’s lack of assistance to Rodgers as he pursued other opportunities after termination.

Our Thoughts

This case serves as a stark reminder to employers to recruit with caution. Where job security is not explicitly promised, certain acts leading up to the employee’s hiring may be construed as implicit promises of job security. Moreover, inducing an attractive candidate to jump ship will factor into the Court’s analysis of an appropriate reasonable notice period. Employing head-hunters (who are invariably found to be agents of the employer) to recruit and lure a candidate may lead to a court construing their efforts as an inducement, thus increasing the reasonable notice period upon termination. The prudent approach for employers is to properly draft termination provisions with a clear and enforceable entitlement for a dismissal, without cause. An additional protection for the employer could include language that the employee knows the risks of leaving his or her current employment, and did so on his or her own volition.