Recently, the Ontario Superior Court of Justice held that an employee who had twelve years of experience working for a competitor company, and who, after being lured away from the competitor, was fired by her new employer after only seven months, was owed reasonable notice that accounted for the years of experience that she had.
Miller v. Alaya Care Inc., 2025 ONSC 1028
In this employment litigation case, the plaintiff, Miller, sued her former employer, AlayaCare, for wrongful dismissal and breach of contract. Miller had been a veteran employee with AlayaCare’s competitor when the co-founder of AlayaCare messaged her on LinkedIn to meet with him and others at AlayaCare. He told her that he wanted to try to convince her to leave her current job and join AlayaCare as an executive. Eventually, AlayaCare gave her a job with higher compensation and considerable bonuses and equity.
According to her employment contract with AlayaCare, if AlayaCare were to fire Miller without cause (without a sufficient reason), she would only be owed four months of her base salary.
The Court held that the termination provisions of her employment agreement were unenforceable, which follows earlier caselaw. The termination provisions were unenforceable because the contract allowed AlayaCare to terminate Miller’s employment without notice for “just cause”, but it failed to provide information on what constitutes “just cause”. Under the Employment Standards Act and its regulations, an employee is not entitled to notice when they are “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer”. The employment agreement did not include any of this terminology, so the Court held that it was unenforceable.
Therefore, the Court turned to the common law for determining what would be considered “reasonable notice” for the termination of Miller’s employment. The factors that courts consider when determining what constitutes reasonable notice are:
- the nature of the employment;
- the length of service;
- the employee’s age at the time of termination;
- the availability of similar employment; and
- whether the employee was induced to leave previous secure employment.
In this analysis, the Court in this case held that, while Miller was only an employee of AlayaCare for seven months, her previous employment should be taken into account: “some credit must be given for the fact that she had 12 years of secure employment” in the industry, which “is the reason she was recruited” by Alayacare.
When analyzing AlayaCare’s inducement, the Court discussed the factors relevant to determining whether there was inducement:
- the reasonable expectations of the parties;
- whether the employee sought out work with the prospective employer;
- whether there were assurances of long-term employment;
- whether the employee did due diligence before accepting the position;
- whether discussions between the employer and the prospective employee were more than persuasion or the normal “courtship” that occurs between employers and prospective employees;
- the length of time that the employee remained in their new position, insofar as the element of inducement lessens with a longer period of employment in the new position; and
- the age of the employee at termination and the length of their employment with the previous employer.
The Court described the following circumstances as supporting a finding of inducement that went beyond normal “courtship”:
- AlayaCare reached out to Miller first;
- AlayaCare told the Miller that her experience would help in “growing” the company;
- AlayaCare asked Miller about her salary and other remuneration with her previous employer, including bonuses and equity options, so that they could “lure” her; and
- AlayaCare hired a number of people that year as part of an “aggressive growth strategy”.
All of the above led the Court to conclude that AlayaCare induced Miller to leave her previous employment, which favours a longer period of notice.
The Court also said her employment was executive in nature and she was 62 years old, both of which favour a lengthier period of notice.
The Court held that a reasonable notice period for Miller in this case was 14 months—ten months more than AlayaCare originally gave her. In addition to her base salary for this notice period, the Court said AlayaCare owed her a significant amount of money in the form of bonus payments and the value of the equity that she would have received if she had not been fired.
All in all, the Court ordered that the defendant pay to Miller $204,404.18, which accounted for reductions due to the four months of pay AlayaCare already gave her, as well as mitigation due to her finding other employment part-way through the reasonable notice period.
Takeaway
First, as an employer, it is important to take the time to ensure that your employment contracts are enforceable. In this case, if the contract had been enforceable, it is unlikely that the Court would have found that Miller was owed common law notice, because the termination provisions of the contract would have allowed the employer to avoid that outcome. However, because the contract’s termination provisions were unenforceable, the Court turned to the common law, under which the Judge determined that Miller was owed 14-months’ notice.
Second, as an employer, if you induce an employee to leave previous secure employment, you should be aware that the Court could view their previous employment experience as being integral to, or at least a factor in, your decision to lure the employee away from their previous employer. In this case, Miller’s length of service and breadth of experience with her previous employer was a considerable factor in their decision to hire her, and the Court took this into account when evaluating what constituted “reasonable notice”.
Should you have any questions relating to wrongful dismissal, employment contracts, or any other employment litigation, please do not hesitate to reach out to one of Walker Law’s experienced litigation lawyers.