Written on behalf of Peter McSherry
It may seem odd that an employee who has yet to start work is owed a severance sum. This, however, is the law. If a person is offered employment to start, for example, on October 1, and is advised that they are no longer required on September 15, there will still be a possible claim. This claim may be more emphatic where the individual has resigned prior employment, given the offer of new employment.
The extent of reasonable notice to be given will vary with each fact situation. There will still be an obligation of the employee to seek out new employment or “mitigate” the damage claim. In a situation where the person is employed when the new offer was made and has not resigned this employment, there will likely be no damage claim, presuming the income sums are the same.
One recent case awarded 6 weeks compensation. The employee was offered a new position as a senior software engineer. He had also resigned from a secure position to accept the new job. Three days before the job started, he was advised that the job no longer existed. The employee had signed a contract which contained a probation period of three months allowing for termination in this time period without compensation. This clause was not effective in defending the case as the employment relationship had yet to begin. It was intended to monitor performance issues, not to defend against termination in this context.
The claim for damages could have been more severe. It was likely limited to 6 weeks as this was the time period of the employee’s unemployment.
In this situation, an employer could also be sued for negligence by offering a position of employment where the new job is in danger of being eliminated when the offer was made. The actual term is “negligent misrepresentation”. Damages tend to be higher when this claim is asserted. The claim could include moving costs, if relevant, and emotional distress damages.
Just as the probation clause was not effective, similarly it is likely a termination clause in the contract would not be effective. This was the case in the tort claim referenced above. This issue was not discussed in the first precedent case.
What was not addressed in this case is a twist of tax law. Damages for wrongful dismissal before employment begins are not taxable, a bit of a bonus to the employee.
Get Legal Advice and Act
This issue is a good example of what legal advice can offer. Most people would have no idea of the remedy available in this context, never mind the tax issue. If you have questions about such employment issues, contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues, help you understand your rights, and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation