Canadian HR Reporter

CANADIAN HR REPORTER November 30, 2015 EMPLOYMENT LAW 5 A letter he received off ering employment with GDL listed an address that was the same as SOS's. e salary, job description and health plan were also the same. ree businesses add up to 1 employer Employee deserved 12 months' notice, not three, says Ontario Court of Appeal Family businesses can be particularly suscep- tible to challenging economic times and, as a result, they frequently search for ways to organize corporately in a manner that limits liability to creditors and employ- ees alike. Having said that, as the Macca- rone family discovered in Dear v. Glamour Designs Ltd., courts will be hesitant to allow the transfer of an employee from one corpo- ration to a related one to reduce the length of her continuous service. Keith Dear commenced em- ployment with Special Occasion Sales (SOS) as a sales representa- tive in 2005. In August 2013, Vince Maccarone, president of Interna- tional Fashion Group (IFGL) and husband of SOS's owner, Kathy Maccarone, advised all sales as- sociates working for SOS that they would be compensated for their work by a separate corporate en- tity known as Glamour Designs. (GDL). Dear's employment continued with GDL thereafter. His job title, remuneration and responsibilities remained unchanged. On Sept. 17, 2014, GDL pro- vided Dear with three months' working notice that his employ- ment would come to an end on Dec. 19. At a summary judgment hear- ing, Dear claimed such notice was insuffi cient. He argued that SOS and GDL were common employers operat- ing under IFGL; he had nine years of service through SOS and GDL and not simply one year (through GDL only); and he was entitled to 12 months' notice of termination at common law. GDL denied that it and SOS were common employers of Dear. It argued that in March 2013, it had provided Dear with notice that his employment with SOS would end in August of that year. Although Vince claimed SOS em- ployees received formal written notice of such termination, no such document was produced, purportedly due to a fl ood at the old premises. Dear denied he had received such notice. In any event, the Superior Court of Justice in Ontario reject- ed GDL's position entirely. Quot- ing the British Colombia Supreme Court's 1987 decision in Sinclair v. Dover Engineering Services Ltd., Justice Suhail Akhtar held that: "As long as there exists a suf- ficient degree of relationship between the diff erent legal enti- ties who apparently compete for the role of employer, there is no reason in law or in equity why they ought not all to be regarded as one for the purpose of deter- mining liability for obligations owed to those employees who, in eff ect, have served all without regard for any precise notion of to whom they were bound in contract. What will constitute a suffi cient degree of relationship will depend, in each case, on the details of such relationship, including such factors as indi- vidual shareholdings, corporate shareholdings and interlocking directorships. " e essence of that relation- ship will be the element of com- mon control." Close relationships After observing that this pas- sage was cited with approval by the Ontario Court of Appeal in Downtown Eatery (1993) Ltd. v. Ontario, Akhtar noted the close relationship between GDL, IFG and SOS. He found that corporate profi le reports indicated Vince was listed as president of IFGL; his daughter Michelle as president of GDL; and his wife Katharine as president of SOS. The reports also suggested GDL and IFGL had the same mail- ing address, and SOS was located adjacent to them. At the same time, Akhtar found that a letter Dear received off ering him employment with GDL listed an address that was the same as SOS's. at letter also indicated Dear's salary, job description, health plan and "existing' holiday time would be the same. It was also clear to the judge that Vince was involved in the management of GDL. Notably, he was stated to be the contact person on records of employment Dear received from both GDL and SOS. Having regard to the evidence of SOS, GDL and IFGL's interre- lationship, Akhtar held that the three entities were components of a family business that could easily have operated as one employer. "In this case, the fact that the family business was split into three segments should not (have been) the cause of injustice to Dear who was continuously employed by that common employer from 1 March, 2005, to his termination date of 19 December, 2014," said Akhtar. Dear, who was 66 years old at the time of his dismissal, was awarded 12 months' reasonable notice. Consider whether GDL would have been able to avoid its liability if it had provided Dear with a new employment agreement that rec- ognized his prior service for the purposes of the Ontario Employ- ment Standards Act, 2000 only, but not for the purpose of calcu- lating his entitlement to notice of termination at common law. At any rate, absent such an agreement or other limiting fac- tor, the decision in Dear dem- onstrates courts will objectively assess the relationship between corporate entities for whom an employee worked when calculat- ing her entitlement to common law notice. Service to all such entities will be taken into consideration where the entities operated under com- mon direction, the employee's duties to each entity were similar, and her benefi ts of employment were continued from one entity to another. Employment counsel ought to keep this principle in mind when assessing an employer's liability at dismissal. For more information see: • Dear v. Glamour Designs Ltd., 2015 CarswellOnt 12594 (Ont. S.C.J.). • Sinclair v. Dover Engineering Services Ltd., 1987 CarswellBC 26 (B.C. S.C.). • Downtown Eatery (1993) Ltd. v. Ontario, 2000 CarswellOnt 634 (Ont. S.C.J.). Rich Appiah is a partner practising labour and employment law at Israel Foulon in Toronto. He can be reached at (416) 640-1550 ext. 225, rappiah@ israelfoulon.com or for more informa- tion, visit www.israelfoulon.com. Family businesses can be particularly suscep- tible to challenging economic times and, as a result, they frequently search for ways to organize corporately in a manner that limits liability to creditors and employ- Rich Appiah LEGAL VIEW International Fashion Group in Toronto was found to have "close relationships" with two other businesses, meaning a 66-year-old employee deserved greater entitlement to common law notice, according to the Ontario Court of Appeal.

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