Employee Terminated Before Starting New Job Entitled To 6 Months’ Notice of Dismissal

It is a little-known employment law principle that an individual who accepts an offer of employment may be entitled to notice of dismissal if the individual is wrongfully dismissed before his or her first day on the job.

This happened in the case of DeGagne v. City of Williams Lake, 2015 BCSC 816. Donald DeGagne accepted an offer of employment as the City’s Chief Administrative Officer. The employment contract he signed provided that the City could terminate his employment with 1 months’ notice during his 6-month probationary period and 6 months’ notice if the employment contract was terminated during his first year of service.

The City provided DeGagne with a severance package representing 1 months’ notice when it terminated his employment.

At trial the judge rejected the City’s argument that DeGagne was only entitled to a notice period of 1 month because could not reasonably have anticipated that he would be entitled to a greater severance payment if the employment contract was terminated before he commenced employment. Recognizing that an employer has an obligation to act in good faith during the probationary period the judge found that “it would be most unjust to impose a reduced obligation for severance without any corresponding obligation of the employer to assess in good faith Mr. DeGagne’s suitability for the position during an actual probationary period of employment.”

The judge awarded DeGagne 6 months’ notice of dismissal on the basis that the termination clause in his employment contract provided him with 6 months’ notice of dismissal during his first year of employment. Alternatively, the judge found that if the employment contract was not enforceable DeGagne was entitled to 6 months reasonable notice of dismissal writing:

Mr. DeGagne was 57 years old when he was terminated as the CAO, the senior administrative position for the municipality. His starting salary was $130,500 per annum and it was anticipated that his salary would increase to $150,000 per annum. He had more than 25 years of experience as a local government administrator. He and his partner had relocated to Williams Lake in anticipation of his new position. Having regard to the factors outlined above, in all the circumstances, I find the reasonable notice period to be six months.

DeGagne v. City of Williams Lake is a reminder that an offer of employment becomes an employment contract as of the date of acceptance of the offer of employment, not the employee’s first day on the job. In those rare circumstances when an employer terminates the employee prior to the employee starting his or her employment, the employee will be entitled to reasonable notice of dismissal or the notice period set out in the termination clause in employee’s employment contract.