In Kim v. BT Express Freight Systems (2020), 317 A.C.W.S. (3d) 255, Ontario’s Superior Court confirmed that an employer may be liable for damages if it withdraws an accepted offer of employment or terminates employment without cause prior to the start date.

In this case, the employee had entered into an employment contract with the employer, which it breached by unilaterally terminating it without cause and without notice.

The Court noted:

A valid employment contract creates an employment relationship even before any work begins.  An employee is entitled to reasonable notice for breach of that contract, and may sue for damages if appropriate notice is not given. (para. 11)”

The court also held that “viewed through the lens of wrongful dismissal or repudiation of contract,” or otherwise, the following were relevant to an assessment of damages:

  • the factors set out in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140, for assessing the reasonable notice period: character of the employment, length of service, age, and the availability of similar employment, considering the experience, training and qualifications of the employee;
  • the terms of the employment contract, including the existence of a probationary period and its length (probation).

While the court also stated that probation is relevant to an assessment of damages, in this case, probation was not applicable because the employee was never given the opportunity to start the job.

The court awarded damages equivalent to three months’ salary, but damages for the last two weeks of the three months were reduced by income from new employment.

In assessing a three-month notice period, subject to this mitigated income, the Court applied the following factors:

  • the employee was 37;
  • he worked an import supervisor for 20 months at $50,000 per year;
  • he was not searching for another job, but was induced to change jobs on the employer’s promise of a higher salary and the possibility of advancement;
  • he was able to find another job at $52,000 per year 10 weeks after leaving.

Based on the above, the Court found that the employment contact contemplated by the parties was, indeed, of a longer term in nature.

The Court also agreed the employee “was not treated properly by BTE”; however, this was properly addressed by the damage award.

Bottom Line for Employers

Accordingly, if employers enter into a valid employment agreement, an employment relationship exists even before the employee begins to perform work.

Even before the start date, an employee is entitled to reasonable notice for breach of the employment agreement unless an enforceable termination clause in the employment contract provides otherwise.

If appropriate notice is not given and the circumstances permit, the employee may successfully sue for damages.

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