We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
12 September 2018
Employees in common law provinces who are offered a job in the sale of business context may not necessarily be required to accept or be subject to a maximum common law notice period. In Dussault v Imperial Oil Limited (2018 ONSC 1168) the Ontario Superior Court of Justice addressed the issues of:
The court determined that there is no upper limit on notice periods and that more than 24 months will be appropriate in exceptional circumstances, such as where:
The court also confirmed that the duty to mitigate does not require employees to accept employment with a purchaser of the business where the offer would significantly affect them going forward.
Mr Dussault worked for Imperial for over 39 years and was 63 years old when his employment was terminated. Ms Pugliese worked for Imperial for 36 years and was 57 years old at the time of termination. Both employees held management roles with significant responsibilities and had generous compensation packages; neither had worked anywhere else since graduating from college or university.
In 2016 Imperial sold its Ontario retail locations under the Esso brand to Mac's Convenience Stores. Pursuant to the sale, the plaintiffs were offered employment with Mac's. The offers of employment included the following terms:
Both plaintiffs declined Mac's offers of employment and brought a wrongful dismissal suit against Imperial, claiming that they were entitled to 32 months' notice at common law.
In addition to challenging the plaintiffs' position around notice by arguing that there were no exceptional circumstances warranting a notice period exceeding 24 months, Imperial held that the plaintiffs had failed to meet their duty to mitigate since they rejected the offers of employment from Mac's.
The court ruled in favour of the plaintiffs on both issues. It found that the employees were entitled to 26 months' notice and that they did not act unreasonably in failing to accept employment from Mac's.
It is likely that more and more cases will arise in which employees are found to be entitled to more than 24 months' notice on termination. To help protect against this, employers in common law provinces should have a written employment agreement in place that contains a severance provision limiting the amount of notice on termination.
In addition, when it comes to a purchaser offering employment to the seller's employees in an asset sale, the seller should insist as part of the deal that the proposed terms and conditions be substantially similar to those enjoyed previously. It should also avoid tying the offer to other significant conditions on the employee's part.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.