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EMPLOYER-EMPLOYEE RELATIONSHIP - Successor companies

Thursday, September 10, 2020 @ 6:04 AM  


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Appeal by the defendant from summary judgment awarding the respondent damages for wrongful dismissal. The respondent was initially employed by 63732 Ontario Limited (637) in 1981. In 2017, the appellant purchased the assets of 637. The appellant argued it hired the respondent as a general labourer on a temporary basis to help move the purchased equipment to its new location. The respondent claimed she was hired as an indefinite employee to continue her duties as a welder. The parties also disagreed as to whether there was an express understanding about whether the respondent would be credited with her years of service with 637. The appellant terminated the respondent’s employment after one month. The respondent sued for wrongful dismissal. The appellant brought a third-party claim against 637. The motion judge found that the motion for summary judgment was the most proportionate, most expeditious and least expensive method of adjudication of the issues. She held that she was able to decide the issues because she took the view that the matters in dispute were not material. The motion judge held that the respondent was continually employed from 1981 to 2017 and that the proper notice period was 20 months. She awarded the respondent $66,391 for damages for wrongful dismissal.

HELD: Appeal allowed. The matter was remitted for trial. This was a case in which the parties agreed to proceed without any discoveries but where cross-examination on the general assertions in both parties’ affidavits was necessary to resolve the competing evidence. Allowing the matter to proceed to a summary trial would have ensured a fair and just determination on the merits while also disposing of the third-party claim. The motion judge erred in concluding that summary judgment was appropriate primarily because she proceeded on an incorrect understanding of the common law that governed an employee’s rights to reasonable notice from the purchaser of an ongoing business. A sharp distinction must be drawn between termination of employment by a successor employer under the Employment Standards Act and under the common law. While the Act was clear that the employment of employees of the vendor of a business who were employed by the purchaser was deemed not to be terminated for the purposes of the Act, under the common law such employees were terminated by constructive dismissal when their employer sold the business and there was a change in the identity of the employer. It was thus necessary to make findings about the nature of the new employment agreement between the respondent and the appellant. The factual disputes were material to the application of the common law.

Manthadi v. ASCO Manufacturing, [2020] O.J. No. 3237, Ontario Court of Appeal, D.H. Doherty, R.G. Juriansz and D. Paciocco JJ.A., July 28, 2020. Digest No. TLD-September72020007