Employers are generally aware that terminating an employment relationship brings legal risks. However, a lesser known employment principle is that employers face significant legal risks even where an employee has not started working for the employer.
In Kim v. BT Express Freight Systems (2020) 317 A.C.W.S (3d) 255 [“Kim”], Ontario’s Superior Court awarded the plaintiff employee wrongful dismissal damages where the employer revoked an offer of employment days before the employee began working for the employer.
In Kim, the employee was recruited by BT Express Freight Systems [“BTE”] after the employee published their resume on a job search website. BTE offered the employee a significant salary increase from his current job, in addition to advancement opportunities after completion of a contractual three-month probationary period. The employee accepted and signed the written offer of employment and provided notice to his current employer. Days before the employee was set to begin working, BTE emailed the employee and terminated/withdrew their employment offer.
The employee brought an action against BTE seeking general damages of nine month’s salary for breach of contract/wrongful dismissal and punitive, aggravated and/or moral damages on the basis that BTE behaved dishonestly.
On a motion for default judgment, the Court found a valid employment agreement existed, the employee had been induced to change jobs, and that BTE had breached the agreement when it unilaterally terminated/withdrew the employment offer without cause and without providing advance notice.
Importantly, the Court confirmed that a valid employment agreement creates an employment relationship even before the employee begins work. Furthermore, the Court confirmed that the terms of the employment agreement, including the existence of a probationary period, would be relevant in determining an assessment of damages. However, because the employee had not begun their probationary period, the probationary clause was not applicable and was not used to determine the appropriate damages. Overall, the Court concluded that damages equivalent to three month’s salary at BTE were appropriate.
Kim v. BT Express confirms that employers must be aware that once an employee enters into a valid employment agreement, an employment relationship exists before the employee even begins working. Employees will be entitled to reasonable notice for breaches of the employment agreement prior to their start date unless an enforceable termination clause in the employment agreement provides otherwise.