Sucessor Employer under ESA not the Same as under the Common Law:

In Carpenter v Brains II ( 2015 CarswellOnt 15542) the Employer went through a CCAA reorganization in which a new company bought some of the assets and employed some of the employees of the previous company. Even though under the ESA the new company was a successor to the old ( and thus she had 17 years service ) under the common law test in Sorel v Tomenson Saunders, [1987] 15 BCLR ( 2d) 38 (CA), the implied term of continuous service was offset by the facts in the case, so she only got credit for 6.5 years. Her notice period was 8 months.

Stinson J listed the following factors in deciding that the implied term of continuous service after a asset sale did not apply :

1) the insolvency of the former employer.

2) the application under the CCAA

3) the termination of her employment by the former employer

4) her hiring on a temporary basis by the CRO ( like a trustee in bankruptcy)

5) the termination of her employment by the CRO

6) the purchase of some but not all of the assets of the former employer by the new employer

7) the provisions of a contract with the new employer which purported to limit her termination entitlements to the ESA, even though the judge found that the clause was illegal as it did not provide for benefits upon termination.

8) Even though the plaintiff continued to perform her same functions despite the change of employer, it was obvious that it was not “business as usual”

My only concern with the judges’ reasoning is that, having found that the ESA only termination clause is unenforceable as it violated the ESA by not including benefits, he then resurrects the same clause for another purpose.

The leading case in this area is Machtinger v HOJ ( 1992 1 SCR 986) in which it clearly states a provision that tries to contract out of the ESA is ” null and void”. If something is” null and void “it is as it it did not exist . How then can something that legally does not exist still affect the legal relationship of the parties?

Unfortunately this is not the first  time that judges have taken into account the existence of an null and void provision and drawn from that document some meaning about the true intention of the parties. This is exactly what the SCC told us not to do in Machtinger. In that case the employer was trying to say that even though the contract was illegal, we could still use it as a guide to determine the true intent of the parties. The SCC soundly rejected that theory and said that the illegal clause could have no effect on ousting the implied term of reasonable notice or implying that the notice period should be a modest one.


109 thoughts on “Sucessor Employer under ESA not the Same as under the Common Law:”

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