THE QUESTION
I own a small franchise and the manager recently walked out on me. I found out that they hired someone two days before they left. This person does not have the right skills or experience for the job. Apparently, they just offered them the job over the phone so there’s no record of the hire. Am I obligated to honour my ex-employee’s job offer?
THE FIRST ANSWER
Lai-King Hum, founder and senior lawyer, Hum Law, Toronto
In Canada, individual employment relationships are governed by contract law. So, an oral agreement between your former manager and the new hire is sufficient to form a contract of employment if these criteria are met:
- Offer and acceptance: Your former manager made the offer, and the new hire accepted the offer.
- Certainty of terms: The terms of the new hire’s employment were clear. This does not mean that every aspect of their employment needs to be finalized, but just the critical parts of the employment relationship.
- Legal Capacity: Your former manager had the authority to offer the job and enter into a binding agreement on the company’s behalf.
- Intention: Your former manager and the new hire intended to create a binding agreement.
Once met, you are obligated to honour your ex-employee’s offer.
Rescinding the offer may amount to wrongful dismissal and a severance package payout or result in a negligent misrepresentation or “wrongful hiring” claim. If this new hire was induced to join your company and leave their current job, all these issues could result in you paying damages.
You may rescind the offer if there are certain job requirements that are not met, or the offer of employment was not finalized – If responsibilities, pay and hours were not yet agreed to.
If rescinding the offer is not an option, present them with a written employment agreement. Include a probationary period that includes a right to terminate during the probationary period without notice or pay in lieu. Then assess if they are a good fit for your business. If not, terminate them without notice or pay in lieu. That said, if you take this approach, ensure you do so in good faith, as employers owe a common law duty of good faith, honesty and trust in the performance of employment contracts.
THE SECOND ANSWER
Sarah Levine, lawyer, Taylor Janis Workplace Law, Edmonton
At first blush, my answer to you would be yes, if your manager made a legitimate hire of this individual, then the offer of employment by your manager, acting as an agent of the business and within their scope of authority to hire new employees, should be honoured.
From a practical perspective, however, if you do not wish to honour the hire, then there does not appear to be any real legal obligation for you to do so, and negligible risk for you to not honour the offer of employment. If we look at provincial or federal employment standards legislation, no notice of termination or pay in lieu of notice requirement would be triggered yet because the employee has not worked at all. Hypothetically, even if they were to work one shift and you decided to terminate them after Day 1, other than paying them for work completed, there would be no statutory obligation to provide them with notice of termination of employment, nor pay in lieu of notice. Similarly, there would be little to no risk of a finding of entitlement to any notice or pay in lieu of notice at common law because, again, the employee has not commenced employment.
Put another way, there can be no reasonable expectation of notice of the termination of employment or pay in lieu of notice, no entitlement to wages or benefits of any kind because no work has been done and there would be no quantifiable damages for the potential employee to pursue. Subject to any extenuating circumstances, such as possible inducement from former employment, on its face there does not appear to be much risk to not honouring your ex-employee’s job offer.
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