Successor Employer Obligated to Provide Pension and Notice Pay to Long-Serving Employee, Ontario Court of Appeal Confirms

Written on behalf of Peter McSherry

In King v. 1416088 Ontario Ltd. (Danbury Industrial), 2015 ONCA 312 [King], the Ontario Court of Appeal upheld the decision of the lower court that a long serving employee, who worked for a succession of companies carrying out similar businesses until he was dismissed without cause, was entitled to a retirement pension under an agreement entered into years earlier with a predecessor corporation. The Court also upheld the trial judge’s ruling that the corporation that replaced the employee’s last employer was a successor employer and was jointly and severally liable with its predecessor corporations to provide the employee with pay in lieu of notice and pension benefits.

In King, the plaintiff, Jack King, was dismissed without cause at age 73. In 1973, King began working as an accountant for the Danbury group of companies, who were involved in the business of valuation and auctioneering in Toronto for several decades. As a result of corporate restructuring, King’s formal employer changed several times over the years, however, his job remained essentially the same throughout. In 1981, King signed a document entitled “Retirement Compensation Agreement”. This agreement included provisions that, if King continued in the employment of the corporation (including its heirs, executors, administrators or successors) until his 65 birthday, he could retire and he or his spouse would be entitled to $736.60 per month for life.

King was dismissed without cause in October 2011. At that time, he received no statutory termination pay and no pension payments. He initiated an action against a number of companies that employed him over the years, as well as the corporation he alleged was their successor. The Ontario Superior Court Judge Graeme Mew upheld King’s action, finding the defendant companies joint and severally liable for monies owed to King for wrongful dismissal and pension benefits. Emphasizing that complex corporate structures should not be used to escape employment standards liabilities, Judge Mew concluded that there was a “sufficient degree of relationship” between the corporate defendants to find them joint and severally liable to King. Judge Mew found that the latest corporation operating the valuation and auctioneer business was  simply the “current incarnation of the business [King] worked for over a period of 38 years.” The judge found that all of the companies were interconnected and underpinned by common control. In light of this finding, Judge Mew held that the retirement agreement was also enforceable against the successor corporations. Accordingly, King was awarded retroactive pension payments owing, pension benefits for life and 24 months’ pay in lieu of notice, less the eight weeks pay that King had received prior to trial.

A unanimous three-member panel of the Ontario Court of Appeal dismissed the employer’s appeal of this case. The Court ruled that the trial judge did not err in determining that the defendant companies were sufficiently interconnected to render them liable to King as a common employer for the purposes pay in lieu of notice and pension entitlements.

To find out more about your rights upon wrongful dismissal, contact employment lawyer Peter McSherry online or at 519-821-5465.
To read the full decision, click here.