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THE QUESTION
I accepted a new job offer and resigned from my old job, giving myself a two-week break in between. The new company started setting me up with an email address and even shipped me a company laptop. Then, a week before my start date, they said their circumstances had changed and they would not be hiring me. I am upset and unsettled by the whole situation, and also now without a job. I’ve even been turning down interview requests from my prior job search because of the new job offer. What are my options?
THE FIRST ANSWER
Alexandra Monkhouse, partner, Monkhouse Law Employment Lawyers, Toronto
If the offer of employment was unconditional – meaning it was not subject to conditions such as background checks, reference checks or corporate approvals – and did not give the employer an express right to cancel before the start date, then withdrawing that offer will generally amount to a breach of the employment contract.
In such a case, you may be entitled to judge-made common law reasonable notice damages (or contractual notice, if the offer contained a valid termination clause). The purpose of these damages is to put you in the financial position you would have been in had the employer given you proper notice of termination.
A useful illustration can be found in Kim v. BT Express Freight Systems, a 2020 Ontario Superior Court decision. There, a 37-year-old employee accepted an unconditional offer, resigned from his prior job and was preparing to start when the employer withdrew the offer one week before his start date. The court awarded him common law notice damages equal to three months’ pay under the new contract, reduced by any income he earned from other work during the notice period.
From a practical perspective, aside from considering your recourse against the new company, you should reach out to your former employer to see if your old position remains available. If not, begin a new job search right away. This is important not only to secure income, but also because the law imposes a duty to mitigate – to take reasonable steps to limit your losses.
THE SECOND ANSWER
Michelle McKinnon, partner, Cassels Brock & Blackwell LLP, Calgary
The individual can consider a wrongful termination claim for damages in lieu of termination notice.
While the law differs across Canada, generally speaking, an employment relationship comes into existence when an employee accepts a job offer, even before they have officially started working. That means that an employer would need to provide notice to terminate the individual’s employment. The amount of termination notice to be provided will depend on whether there is a signed employment contract that determines how much notice should be provided.
If there is a signed employment contract and it provides that the employee’s termination notice entitlement is limited to the minimums in employment standards legislation, then they won’t be entitled to any termination notice and a wrongful termination claim would then not serve any purpose. This is because under employment standards legislation, an employee is not entitled to termination notice during the first three months of employment.
If there is no signed employment contract, then an employee will be entitled to termination notice under the common law, which is assessed based on certain factors. These include the employee’s age, length of employment, character of employment and the availability of comparable employment at the time of termination.
Common law reasonable notice can be increased where there is evidence that the employee was induced to leave secure, long-term employment. The inducement factor comes into play when an employee has left a relatively long-term, secure job and is terminated from new employment a short time after being hired (or, in this case, before they even start). If the employee was induced into leaving their former employment to start employment with the new employer, then the employee’s claim for damages in lieu of reasonable notice may be increased.
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