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Employee Fired After Enticed Away From Secure Job

Luring an employee away from their previous job can cost the employer more if the employee is later wrongfully dismissed. Consider two recent cases from BC’s Court of Appeal.

Ronald Johnson had a good job as a regional truck manager with a transport company in Kamloops. He was responsible for some 200 to 250 employees, administered a $35 million budget, and reported directly to the vice-president. He earned $75,000 a year, took eight weeks of annual holidays, and had the use of a company vehicle. This all came to an end, however, when the ABC truck dealership (not its real name) enticed him to come and work for them instead.

The idea was that Johnson would become ABC’s branch manager, after first gaining some experience as a salesman. He understood he’d earn $100,000 a year once he became manager, which he thought would occur within several months. But he’d start off at $4,700 a month.

Unfortunately, ABC became unhappy with Johnson’s performance and Johnson was never promoted. Almost four years later, he was told his salary structure would change to $2,000 a month plus commission and one of the owners would become branch manager instead. He left as a result of being effectively let go, and sued ABC for wrongful dismissal

The court considered how much "notice" Johnson should have been given. If an employee is wrongfully dismissed, he or she is entitled to "reasonable notice" or a severance amount equal to this notice period. A very rough guideline is one month’s notice for each year worked (to a maximum of around 24 months). In Johnson’s case, as he had only worked for the ABC truck dealership for some four years, four months’ severance would otherwise have been appropriate.

But many factors must be taken into account in determining a severance amount – including whether the employee was lured away from another job.

Said the court: "…it would be unfair to fix the notice period on the basis of [Johnson’s] years of employment with the defendant. The fact is that the plaintiff was induced to leave a senior position with [the transport company] for whom he had worked for 21 years… The circumstances of this case are such that the notice period should be at the very high end of the range, namely 24 months." Johnson’s income was $66,000 at the time, so his judgment was for $132,000 (less what he earned during the 24-month period).

In the other case, Bruce Gillies had worked for Burns Fry for 13 years, earning between $250,000 and $300,000, when he was recruited by Goldman Sachs. He was told he’d be a candidate for sales manager and his position at the firm would be secure. Later, he was also dissuaded from accepting a competing job elsewhere. But when Goldman Sachs was reorganized some five years later, Gillies was let go.

The BC Court of Appeal increased his notice from 12 months to 13 months, partly because Gillies was "induced to leave secure employment on the representation of job security at his new firm." This increase was important because it entitled Gillies to share in the firm’s IPO offering, which occurred during this last month. He received judgment for over $425,000, plus participation in the IPO share offering.

Other factors in addition to inducement must also be considered when determining the appropriate notice.

This law column was written by Janice Mucalov, LL.B.,* with the assistance of PIHL & ASSOCIATES LAW CORPORATION. A version of this column was published in the Kelowna Daily Courier. The column provides information only and must not be relied on for legal advice. Please contact PIHL & ASSOCIATES LAW CORPORATION for legal advice concerning your particular case.

 

*Lawyer Janice Mucalov has authored several popular law books and writes about legal affairs for a variety of publications. "You and the Law" is a registered trade-mark. © by Janice Mucalov.