Narrowing the ESA, 2000’s Generality – Not Permitted

Written by on May 15, 2009 in Blog, Legislation, Terminations

Abbott v. Bombardier Inc. (c.o.b. Bombardier Aerospace) – Ontario Court of Appeal – March 30, 2007.

Decisions which will alter or stray from the intention of legislation will not be allowed by the Courts.

The decision on March 30, 2007 by the Ontario Court of Appeal in Abbott v. Bombardier Inc. (c.o.b. Bombardier Aerospace) [2007] O.J. No. 1173 (“Abbott”) should act as a warning to all employees and employers who seek a judgment which carries with it the potential of altering the intention of a piece of legislation. Such a pursuit will be dismissed by the Courts.

In Abbott, a group of employees who worked for an employer were transferred to another company. The company had agreed to the following: the employees would have the same functions and responsibilities that they had with their former employer; to recognize “each of the affected employee’s original date of hire with [the former employer] both for the purpose of determining notice of termination and severance pay”; and, to recognize each employee’s seniority with the former employer. The employees were given eight weeks notice from their former employer and each accepted the new employment.

Following this, the employees commenced an action against their former employer claiming severance pay pursuant to the Employment Standards Act, 2000 (“ESA, 2000”). The employer brought a motion for summary judgment to dismiss the employees’ claim and the Motion Judge granted the motion finding that the employees had “failed to meet their onus of demonstrating that the terms of their employment with [the company] were radically or fundamentally different than the terms of their employment with [the former employer]”. Furthermore, the Motion Judge found that the hiring of the employees was simply a sale of a part of a business for the purposes of section 9 of the ESA, 2000 which states, “if an employer sells a business or a part of a business and the purchaser employs an employee of the seller, the employment of the employee shall be deemed not to have been terminated or severed for the purposes of the Act…[the employee’s] employment with the seller shall be deemed to have been employment with the purchaser for the purpose of any subsequent calculation of the employee’s length or period of employment.”

The employees appealed this decision to the Court of Appeal, claiming that the Motion Judge failed to apply the “going concern” test when determining whether the transfer of the employees constituted a sale of a part of a business within the meaning of section 9 of the ESA, 2000. The employees cited case law regarding the “going concern” test, such as Federated Buildings Maintenance Corp., [1989] O.E.S.A.D. No. 14, which states, “For a transaction to be considered a –sale of a business’ there must be more than the performance of a like function, by another business entity. There must be a transfer from the essential elements of the business as a block or as a –going concern’.”

The Ontario Court of Appeal dismissed the appeal. In rendering this decision, the Court stated that “the purpose of s. 9 of the [ESA, 2000] is to protect minimum statutory entitlements that are related to length of employment where the purchaser of a business, or part of a business, continues to employ the employees of the vendor following the sale.” In regards to the “going concern” test, the Court found that the test could only narrow the scope of section 9 of the ESA, 2000. Since the purpose of the ESA, 2000 is “intended to set minimum standards for terms of employment”, the Court found that narrowing the scope of section 9 of the ESA, 2000 would be contrary to what section 10 of the Interpretation Act states, which is that it should be given “a fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit.”

Abbott is an important decision of which both employees and employers should be aware. The decision indicates that the Courts will not stray from the original intention of a piece of legislation when making their findings, but will rather “ensure the attainment of the object of the Act according to its true intent, meaning and spirit.” For both employees and employers, this decision provides that the Courts will not only consider the issue before them and the effect it will have on the parties involved, but will also consider the ramifications their conclusion will have on future issues and interpretations of legislation. For this reason, both employees and employers need to ensure that what they are seeking at Court will not significantly alter the intention of a specific legislation. Abbott demonstrates that if this is the case, then the Courts will not accept such a claim.

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