Canadian Employment Law Today

Canadian Employment Law Today | 3 Canadian HR Reporter, a Thomson Reuters business 2015 Cases and Trends Transfer of employment to related company doesn't reduce service Employee worked in the same position for companies owned by members of same family before being dismissed BY RICH APPIAH FAMILY BUSINESSES can be particularly susceptible to challenging economic times and, as a result, they frequently search for ways to organize themselves corporately in a manner that limits their liability to creditors and employees alike. Having said that, as the Maccarone family discovered in the case of Dear v. Glamour Designs Ltd., courts will be hesitant to allow the transfer of an employee from one corporation to a related one to re- duce the length of her continuous service. Keith Dear commenced employment with Special Occasion Sales (SOS) as a sales representative on March 1, 2005. In August 2013, Vince Maccarone, the president of In- ternational Fashion Group (IFGL) and hus- band of SOS's owner, Kathy, advised all sales associates working for SOS that they would be compensated for their work by a separate corporate entity known as Glamour Designs Ltd. (GDL). Dear's employment continued with GDL thereafter. His job title, pay, and responsibilities remained unchanged. On Sept. 17, 2014, GDL provided Dear with three months' working notice that his employment would come to an end on Dec. 19. At a summary judgment hearing, Dear claimed that such notice was insufficient. He argued that SOS and GDL were common employers operating under IFGL; he had nine years of service with SOS and GDL) and not simply one year (with GDL only); and he was entitled to 12 months' notice of termina- tion at common law. GDL denied that it and SOS were com- mon employers. It argued that in March 2013, it had provided Dear with notice that his employment with SOS would end in Au- gust of that year. Although Vince Maccarone claimed that SOS employees received for- mal written notice of such termination, no such document was produced, purportedly due to a flood at the old premises. Dear de- nied that that he had received such notice. In any event, the court rejected GDL's po- sition entirely. Quoting the British Colombia Supreme Court's 1987 decision in Sinclair v. Dover Engineering Services Ltd., Justice Su- hail A.Q. Akhtar held that: "As long as there exists a sufficient degree of relationship between the different legal entities 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 determining liabil- ity for obligations owed to those employees who, in effect, have served all without regard for any precise notion of to whom they were bound in contract. What will constitute a sufficient degree of relationship will depend, in each case, on the details of such relation- ship, including such factors as individual shareholdings, corporate shareholdings, and interlocking directorships. e essence of that relationship will be the element of common control." Companies owned by different family members had close relationship After observing that this passage was cited with approval by the Ontario Court of Appeal in Downtown Eatery (1993) Ltd. v. Ontario, Justice Akhtar noted the close relationship between GDL, IFG, and SOS. Corporate profile reports indicated that Vince was listed as president of IFGL; his daughter as president of GDL; and his wife as president of SOS. e reports also suggested that GDL and IFGL had the same mailing address, and SOS was located adjacent to them. At the same time, Justice Akhtar found that a letter Dear received offering him em- ployment with GDL listed an address that was the same as SOS's. e letter also indi- cated Dear's salary, job description, health plan, and "existing" holiday time would be the same. It was also clear to Justice Akhtar that Vince was involved in the management of GDL. Notably, Vince was identified as the contact person on Records of Employment that Dear received from both GDL and SOS. Considering the evidence of SOS, GDL, and IFGL's interrelationship, Justice Akhtar held that the three entities were components of a family business that could easily have operated as one employer. "e fact that the family business was split into three segments should not (have been) the cause of injustice to Dear who was con- tinuously employed by that common em- ployer from March 1, 2005, to his termina- tion date of Dec. 19, 2014," said Akhtar. Dear, who was 66 years old at the time of his dismissal, was awarded 12 months rea- sonable notice. Consider whether GDL would have been able to avoid its liability if it had provided Dear with a new employment agreement that recognized his prior service for the purposes of the Ontario Employment Standards Act, 2000 only, but not for the purpose of calculat- ing his entitlement to common law notice of termination. At any rate, absent such an agree- ment or other limiting factor, the decision in Dear demonstrates that courts will objectively assess the relationship between corporate en- tities for whom an employee worked when calculating entitlement to common law notice. Service to all such entities will be taken into consideration where the entities operated un- der common direction, the employee's duties to each entity were similar, and her benefits of employment were continued from one entity to another. For more information see: • Dear v. Glamour Designs Ltd., 2015 Car- swellOnt 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.). ABOUT THE AUTHOR RICH APPIAH Rich Appiah is a partner practicing labour and employment law with Israel Foulon LLP in Toronto. He has appeared before the Ontario and Superior Courts of Justice, the Court of Appeal for Ontario, and the Ontario Labour Relations Board. He has also represented clients in proceedings before boards of arbitration, the provincial and federal Human Rights Tribunals, the Ontario Ministry of Labour (Employment Standards Branch), and the Canadian Industrial Relations Board. He can be reached at (416) 640-1550 ext. 225 or rappiah@israelfoulon.com.

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