Evaluating the terms for continued employment
Steven had worked for a company for many years when another corporation bought it’s assets. The new employer did not buy the shares in the company. If they had there would be no change or new relationship with Steven. He would have still worked for the same corporation but with a new shareholder. When an asset purchase happens, the new employer buys the book of business and the assets of the company or a particular division. Steven received a letter before the closing from the purchaser. It said that he would keep his same salary for 18 months after which it would drop. It said that he would lose some of his benefits but receive an unknown cash payment in lieu of those benefits. When he asked how much he was told he could only find that out if he signed the agreement.
Finally, the new contract indicated that if he was ever terminated he would receive Employment Standards Act minimum payments and nothing more. That means that he would not be able to make a claim for reasonable notice at common law (the courts) based on his many years of service. Steven refused to sign the contract and when the purchase took place his old employer terminated his employment. It paid him the minimum payments required by the Employment Standards Act that were triggered by his termination. When he sued for the reasonable notice to which he was entitled at common law, the employer refused. It said that he had failed to mitigate his damages because he did not sign the contract with the purchaser. He refused reasonable alternative employment.
Although a terminated employee receives the Employment Standards Act minimums even if they get a better paying job the next day that does not apply to the damages the courts will award based on your age, seniority and level of responsibility. In order to get those damages you have to make reasonable efforts to apply for and accept comparable employment. The employer’s position was that the purchaser’s offer to Steven was comparable. Steven said it was not. The judge agreed with Steven and the Court of Appeal agreed with the judge. Steven’s claim against his former employer was not without risks. A different judge on a different day could have decided that the new job was close enough to the old job and found in the employer’s favour. Within the last 2 years I have seen at least one person cross their fingers and sign a contract like the one offered to Steven limiting their entitlements on termination to Employment Standards Act minimums only to be terminated 2 months later with only the minimums.
Although the Employment Standards Act clause was not the only factor tipping the scale in Steven’s favour, it was an important one. If Steven’s employer wanted to be protected from claims like his it should have insisted that the purchaser offer all employees the same job at the same rate and the same hours and benefits without any new termination clause
