Canadian Employment Law Today

May 14, 2014

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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Canadian Employment Law Today Canadian Employment Law Today | | 7 Canadian HR Reporter, a Thomson Reuters business 2014 More Cases More Cases clear that if the worker breached any of the agreement's terms it would be grounds for termination. e agreement also stated any arbitration following a dismissal would be "limited solely to the determination as to whether any of the conditions" of the agree- ment were breached. e worker returned to work on Feb. 10, 2014. Two days later, he was fi ve minutes late returning to his work station after lunch. A meeting was held in which Bombardier in- dicated it could have triggered the terms of the last chance agreement, but it decided not to do so in the hopes it would serve as a reminder to the worker of the "precari- ous situation" he was in. e union joined Bombardier in stressing to the worker how important it was for him to comply with the last chance agreement if he wanted to re- main employed. e worker thanked Bom- bardier for giving him another chance. On Feb. 18, the worker was on an evening shift that was fairly new to him. A buzzer sounded at 11 p.m. and he assumed his shift was over, though he had worked the same shift the previous week and left at the cor- rect time, which was 11:30 p.m. On his way home, he realized his mistake but didn't tell anyone about it except the lead hand on the shift. Bombardier later discovered that the worker had left early and called a meeting with the worker and the union. After some discussion, the worker's employment was terminated eff ective Feb. 26 for breach- ing the last chance agreement. e union grieved the dismissal. e union pointed out other employees were given some leniency with respect to early departures and the worker was subject to diff erent rules. However, the arbitrator found the worker was in a diff erent posi- tion than other employees because of his past misconduct, which put him under the terms of the last chance agreement without the same leniency. e arbitrator found since the worker was under the specifi c terms of the agreement and knew of his position, he should have been more careful as to when he left work. Since the worker breached his agreement, there was no other option but to terminate the worker's employment. " e (last chance agreement) must be respected by employees and arbitrators. Employers would have no incentive to enter into such agreements if it were otherwise," said the arbitrator. "Such agreements are, in my view, important tools available to the parties to preserve the employment of employees in circumstances where termi- nation of employment would otherwise be inevitable." e arbitrator found the worker "made almost no eff ort to comply" with the last chance agreement and therefore Bombar- dier had just cause to dismiss him. See Bom- bardier Aerospace and UNIFOR, Local 112 (Baker), Re, 2014 CarswellOnt 3152 (Ont. Arb.). Worker in more precarious position « from LAST CHANCE on page 1 Successor company responsible for 38-year employee's severance and pension: Court A NEW COMPANY carrying on the name of a previous incarnation is a successor em- ployer owing a long-time employee notice of termination, the Ontario Superior Court of Justice has ruled. Jack King, 75, joined Danbury Sales (1971), a liquidation, appraisal and auction- eering business, in September 1973 as an accountant and bookkeeper. In 1981, King signed a "retirement compensation agree- ment," entitling him to retirement compen- sation if he remained employed with the company until he was 65 years old. In 1987, a company called Danbury Sales Inc. (DSI) was incorporated by Danbury 1971's owner. A new owner eventually took over and acquired the rights to the Danbury name and logo from the original owner in 1995. King helped set up the new company's payroll and other business accounts. DSI ceased operations in 2001, was re- placed by another company called Danbury Industrial, which was then succeeded by Danbury Appraisal in 2005. Danbury Ap- praisal ceased business in 2011 and was replaced by another company called Dan- bury Solutions. Each of the companies was incorporated under a diff erent business, but they all had the same owner, and King was ordered to set up the payroll and other accounts for each company. King's formal employers over the years were Danbury 1971, Danbury Sales Limited, DSI, Danbury Corp., and Danbury Industrial. After a few years of fi nancial troubles, the owner decided to wind up the business of Danbury Industrial. He terminated all of Danbury Industrial's employees in October 2011, including King. A former Danbury Industrial employee who was related to the owner went into the auction business himself and soon other former employees joined. He used the in- corporated entity that owned the Danbury name, with the new business name DSL. e new business boasted of the Danbury corporate lineage and had a similar logo, which the owner claimed was to emphasize the connection with former Danbury em- ployees, not the Danbury business. e new company also used the same offi ces, tele- phone system and equipment as Danbury Industrial. When King wasn't hired by DSL, he fi led a claim for wrongful dismissal damages and pension benefi ts under his retirement com- pensation agreement. He also argued DSL and the other Danbury companies consti- tuted a common employer that was respon- sible for the amounts owed to him. e court noted that Danbury Industrial should be responsible for payment of termi- nation pay, pay in lieu of notice and vacation pay, as it was the employer that terminated King's employment. However, the company had wound up business and was unlikely to be able to pay anything. Also, the owner of Danbury Industrial claimed the reason for termination was going out of business and it was unrelated to the new venture. However, the court found DSL was "the current incarnation of the business that (King) worked for over a period of 38 years." e various incorporated entities with the same owner carried on business under the Danbury name and each new venture had King's assistance in starting up. As a result, all of the former incarnations were con- nected and the new DSL company had the groundwork laid by Danbury Industrial and its predecessors, said the court. In addition, King performed essentially the same tasks for each of the Danbury companies and never received a record of employment — with the exception of one — when one ended and another began. As a result, DSI and its predecessors should be considered successor employers and DSI must honour the retirement compensation agreement and its notice obligations, said the court. DSI was ordered to pay King 24 months' pay in lieu of notice — $148,562.67 — plus the value of his retirement compensation — $736.60 per month — from the time of his termination to the date of the judgment, which was 29 months. See King v. 1416088 Ontario Ltd., 2014 CarswellOnt 3551 (Ont. S.C.J.).

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