Think Twice when Dismissing an Employee Prior to the First Day of Work

Categories: Blog, Employment Law

Most employers are aware of the obligation to provide an employee with notice of termination or pay in lieu of notice. However, many employers are surprised to learn that an employee who is terminated without cause prior to starting work is similarly entitled to reasonable notice or pay in lieu of notice. This was the case in Buchanan v. Introjunction Ltd, 2017 BCSC 1002 (“Buchanan”), where an employee was awarded six weeks’ pay in lieu of notice after his accepted offer of employment was “retracted” prior to the first day of work.

Mr. Buchanan applied for a job as a senior software engineer with Introjunction. He was subsequently offered the job and signed a written employment contract. The contract stated that his start date was November 1, 2016. Mr. Buchanan quit his other job in anticipation of starting work at Introjunction. Unfortunately for Mr. Buchanan, Introjunction had a change of heart with respect to its staffing needs and “retracted” its offer before his start date. As Mr. Buchannan was now jobless, he sued Introjunction for wrongful dismissal.

At trial, Introjunction conceded that employees who accept a position but are subsequently dismissed prior to the first day of work are entitled to reasonable notice or pay in lieu of notice absent an express term in the employment contract to the contrary. However, it argued that a probation clause in the contract permitted it to terminate Mr. Buchanan’s employment without notice or pay in lieu of notice. The probation clause stated that Mr. Buchanan’s employment was subject to a probation period of three months commencing on the first day of employment.

The Supreme Court of British Columbia disagreed with Introjunction for two reasons. First, the probation clause only became effective on the first day of employment. As Mr. Buchanan never made it to the first day of employment, the clause was not enforceable. Second, Introjunction did not assess Mr. Buchanan’s suitability for the position. The purpose of a probation clause is to assess the suitability of an employee. An employer can generally dismiss an employee without notice or pay in lieu of notice if an employee proves unsuitable. However, the assessment of suitability must be done in good faith. Given that Mr. Buchanan was fired before starting work, Introjunction had not engaged in a reasonable assessment of his suitability for the position. Accordingly, Introjunction could not rely on the probation clause to escape its duty to provide Mr. Buchanan with reasonable notice.

As a result, the Court concluded that Mr. Buchanan had been wrongfully dismissed and awarded him damages in lieu of 6 weeks’ notice amounting to $14,424.

This case serves as an important reminder that employees – even those who have not started work – are entitled to reasonable notice of termination. Employers should exercise caution when terminating an employee prior to the start date as severance obligations may arise prior to the employee commencing work. Although Mr. Buchanan was awarded six weeks’ pay in lieu of notice, the damages award could have been significantly higher if Mr. Buchanan was older or Introjunction had induced Mr. Buchanan to leave his prior employment.