We have previously written on the decision of the Ontario Superior Court of Justice in Danbury v 1416088 Ontario Ltd (see our blog on that decision here).
The Court of Appeal recently dismissed an appeal from that decision. The reasons given were not extensive, but the Court of Appeal upheld the trial judge’s determination that there was a sufficiently close relationship amongst the various companies for which the employee had worked to establish common liability under the Employment Standards Act. As a result, the final company for which the employee worked prior to dismissal was liable for the employee’s entire length of service in determining the common law notice period. The Court of Appeal also upheld the liability of the final employer for the employee’s entire pension entitlement.
Although this case does not change the law, it does confirm the Court of Appeal’s own 14 year old decision in Downtown Eatery (1993) Ltd. In Downtown Eatery, the Court of Appeal established that the test for common employer status is whether there is a “sufficient degree of relationship” between the various legal entities to suggest they should be treated as a single employer.
Employers must be cautious when calculating length of service for termination and restructuring purposes. Employees who have served through reorganizations and other corporate transactions may be entitled to a notice period based on their cumulative experience, which can significantly increase an employer’s liability for notice, severance, and pension entitlements. As always, employers should consult with legal counsel prior to any significant restructuring.
