By: Stephanie McDonald and Baljinder (Bal) Singh Tiwana
The decision in Miller v. Alaya Care Inc., 2025 ONSC 1028 reinforces a critical principle in employment law: where an employee is terminated without cause shortly after being recruited from secure employment, particularly following promises of a better opportunity, courts are prepared to extend reasonable notice to reflect what the employee gave up.
Courts recognise that inducement places employees in a vulnerable position. Where an individual leaves a stable and promising position, based on representations made by the new employer (or its agents), and those expectations do not materialise, the court may seek to rebalance the situation by awarding enhanced reasonable notice, to compensate for their loss.
If you were induced, you should be cautious about accepting the first termination offer.
Employers often rely on termination clauses to limit your entitlements to statutory minimums under the Employment Standards Act. However, such clauses are frequently found to be unenforceable. In those cases, employees are instead entitled to common law reasonable notice. Where inducement is present, the previous years’ service with prior employer are taken into consideration when determining the appropriate reasonable notice period.
It is therefore essential to have your employment contract reviewed by a lawyer, along with a careful assessment of your individual circumstances.
The Miller decision is a powerful reminder that even employees with less than one year of service, may still be entitled to substantial compensation.
Facts of the Case
Ms. Miller, a 62-year-old senior executive, was actively recruited by AlayaCare Inc. after approximately 12 years of service with her former employer. She did not seek out the opportunity; rather, the employer approached her directly.
To secure her acceptance, AlayaCare offered an attractive compensation package, including an increased salary, bonus eligibility, and equity incentives that vested over time. Additionally, the employer offered to defend any legal actions her prior employer might take against her.
As part of her transition, Ms. Miller gave up substantial unvested equity from her previous role, including restricted share units and stock options valued at approximately $400,000 USD.
Once Ms. Miller started her new role, AlayaCare assigned her duties that did not align with her employment contract.
After approximately seven months, AlayaCare terminated Ms. Miller’s employment without cause, allegedly due to a workforce reduction.
Enforceability of the Termination Clause
The Court found the termination provisions to be unenforceable. As a result, the employer could not rely on them to limit Ms. Miller’s entitlements to the statutory minimums under the Employment Standards Act (ESA).
Accordingly, Ms. Miller had a legal right to her full common law reasonable notice entitlements.
Determining Reasonable Notice
In assessing reasonable notice, the Court applied the established Bardal factors, placing particular emphasis on inducement.
Key considerations included:
- Ms. Miller’s 12 years of prior service in a stable role
- Her senior executive position
- Her substantial compensation package
- Her age (62), affecting her future employment prospects
- The employer’s active recruitment efforts, including outreach via LinkedIn (direct initiation of contact)
- The fact that Ms. Miller did not initiate the move
- The employer’s agreement to indemnify her for potential legal exposure arising from her departure
- The use of significant equity incentives to attract her
- The employer’s aggressive growth strategy, which formed part of the recruitment strategy for AlayaCare
The Court treated these factors, particularly inducement, as materially increasing the reasonable notice period.
Outcome
The Court awarded Ms. Miller 14 months’ reasonable notice. The court concluded that AlayaCare’s conduct exceeded the ordinary standards of recruitment i.e. typical “courtship” between an employer and potential employee.
Key Takeaways
Inducement is a powerful factor. Where an employer actively recruits an individual away from secure, long-term employment, particularly through enhanced compensation and/or promises of opportunity, courts may substantially increase the reasonable notice period to reflect what the employee relinquished.
In practical terms, even employees with short service may be entitled to significant severance if inducement is established.
Conclusion
If you were recruited into a new role and later terminated, your length of service alone does not determine your entitlements. The circumstances surrounding your hiring, particularly whether you were induced to leave secure employment, may entitle you to far more than your employer initially offers.
In many cases, this can result in significantly greater compensation than expected.
Workplace Sage Legal can help assess whether inducement applies to your situation and determine whether you may be entitled to enhanced reasonable notice under Ontario law.
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Learn more about employment law through the articles below:
- Who is entitled to Reasonable Notice, and how is it calculated?
- Recruited Into Tech, Terminated Months Later: Your Rights in Ontario
DISCLAIMER: This article/blog is provided for educational/informational purposes only. This blog does not constitute legal advice. Do not rely on any advice before speaking with a lawyer. This blog does not form a solicitor-client relationship.
