Notice Required When New Employee Is Terminated Before Starting
The COVID-19 pandemic is an example of just how quickly a business’ hiring circumstances can change. The business may be proceeding as usual, with hiring decisions being made and offers of employment being extended to prospective employees. Suddenly, something happens, and the business needs to consider reducing its workforce. If new employees have been hired but have not yet started, the business may be considering trying to reverse those new hires. As a 2020 case illustrates, businesses should be cautious before proceeding down that road.
In Kim v. BT Express Freight Systems, 317 ACWS (3d) 255, a business withdrew/terminated an accepted job offer before the new employee even began work. Mr. Kim already had a job and was not actively seeking new employment; however, his resumé was posted on a job search website. BT Express found Mr. Kim’s resumé, contacted him, and offered him employment at a significantly higher salary (an increase of $30,000 per year from his existing salary) with an opportunity for advancement after successful completion of a probationary period. Mr. Kim accepted the offer and gave notice of resignation to his employer. However, two weeks later, only five days before his start date with BT Express, Mr. Kim received an email from BT Express notifying him that the offer of employment was being withdrawn/terminated. Mr. Kim’s existing employer had already hired a replacement for Mr. Kim, and Mr. Kim was only able to stay with that employer for an additional week beyond his original resignation date.
Mr. Kim brought an action against BT Express for breach of contract and wrongful dismissal. BT Express did not defend, and Mr. Kim proceeded with a motion for default judgment. The Court awarded judgment in favour of Mr. Kim, finding that an employment contract had been entered into between Mr. Kim and BT Express and that BT Express breached that contract by terminating it without cause and without notice. The Court confirmed that an employment contract creates an employment relationship even before any work begins, and an employee is entitled to reasonable notice of termination of that contract and may sue for damages if such notice is not provided. In relation to the probationary period noted in the employment contract, the Court determined that the probationary period did not apply because Mr. Kim was not given the opportunity to start the new job. The probationary period was, however, relevant to determining the appropriate amount of damages.
The Court considered the usual “Bardal factors” used to determine common law reasonable notice periods (the character of employment; the length of service of the servant; the age of the servant; and the availability of similar employment, having regard to the experience, training and qualifications of the servant), and noted the probationary period as well as the fact that Mr. Kim was induced to change jobs. The Court concluded that three months’ reasonable notice was appropriate in the circumstances.
This case is an important reminder to employers that employment contracts create binding agreements before new employees actually start work. If an employment contract does not contemplate the amount of notice (if any) to be provided before the employee actually starts work, then an employer may face liability for damages if the employee is not allowed an opportunity to begin in his/her employment. In addition, the case illustrates that an employer cannot rely on a probationary period clause (which often provides the employer with the ability to terminate employment within the first three months of employment without notice or pay in lieu of notice in accordance with the Employment Standards Act, 2000) when terminating employment before an employee starts work.
If you have any additional questions on this topic, please don’t hesitate to reach out to our team.
