Generally, whenever someone in Ontario is fired before they start their first day of work, they are entitled to severance (also known as ‘reasonable notice’) just the same as someone who had worked several years for the employer. The same applies to employees whose accepted offers are withdrawn or rescinded.
The Law of Dismissal: Absent a contractual term stating otherwise, an employee who is terminated without cause is entitled to reasonable notice (also known as ‘severance’). That proposition holds true even where the termination occurs before the employee has started work: DeGagne v. City of Williams Lake, 2015 BCSC 816 and Buchanan v Introjunction Ltd., 2017 BCSC 1002.
Everyone who accepts an offer of employment instantly forms an implied, unwritten contract with their future employer (unless they were presented with a written contract with the offer). By default, this implied unwritten contract is for employment for an indefinite duration. Also by default, there is nothing in the implied, unwritten contract that ousts the right to severance even if the employee is terminated on or before the first day.
The only way an employer could displace an employee’s right to severance even before the employee starts work is if the employee signed a written employment contract with a probationary clause when they accepted the offer of employment. To be clear, only a written contract that ALSO includes a probationary term may oust the right to severance upon early termination.
However, employers who choose to insert a probationary clause in their employment contracts should ensure that the probationary clause starts immediately, not the day the employee is supposed to start work. Otherwise, the probationary clause will not apply to employees terminated in the rare case of before they start work, and the employer will owe them severance.
For example, in one case, the employer wisely chose to include a probationary clause in its employment contract but failed to make the probationary clause start before employment was to begin. In the result, the employee who was terminated before he started work was entitled to six weeks’ severance:
First, on its face, the probation clause provides that the three-month probation period commences as of the effective date of November 1, 2016. Thus, it was not in force on October 29, 2016, when the defendant retracted the Contract. Had the defendant intended to maintain a right to terminate the Contract without notice at any time after execution, it could have included a term to that effect.
Buchanan v Introjunction Ltd., 2017 BCSC 1002 (CanLII), https://canlii.ca/t/h4c70
Summary for Employees: Termination Before Employment
When an individual accepts a job, he or she instantly becomes privy to an employment contract. This is true even if the individual did not sign any written document.
If an employer decides to terminate an individual before they were to start work, it is a breach of contract. In the result, the employee would be entitled to a couple of months of severance, generally.
Summary for Employers: Termination Before Employment
Employers who wish to avoid paying severance in case of termination before employment begins should use written employment contracts at the time of the job offer. Very importantly, the employment contract should include a probationary clause that begins immediately, not on the date the employee was supposed to start working. Also very importantly, the probationary clause should only last three months, otherwise, it is void.
Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.