What happens when ambiguous facts get resolved via summary judgment and then appealed? One gets decisions like Ariss v. NORR Limited Architects & Engineers, 2019 ONCA 449, which unfortunately add more confusion to the law of termination than clarity.
Can an employee extinguish his statutory right to severance pay by way of a full and final release signed in the context of a share sale?
According to a 2018 decision of the Court of Appeal for Ontario, Kerzner v. American Iron & Metal Company Inc., 2018 ONCA 989 (CanLII), the answer to that question is a resounding “no.”
The case has real implications for those who practice employment law in the context of the sale of a business.
What happens in an asset sale transaction, if the purchaser / new employer neglects to give actual notice to an employee of the vendor, whom the purchaser intends to employ, that the employee will not be credited for his past years of service with the former employer/vendor once he becomes an employee of the purchaser?
According to a 2018 decision of the Ontario Superior Court of Justice sitting at Ottawa, Ariss v. NORR Limited Architects & Engineers, 2018 ONSC 620 (CanLII), the answer is:
In the absence of notice from new employer/purchaser that an employee will not be credited for his years of service with former employer/vendor, recognition of that service is deemed to be part of employee’s contract of employment with purchaser – regardless of any letter of termination actually received by the employee from the vendor.
In an asset-sale transaction, if the purchaser offers to employ an employee of the vendor, can the purchaser vary some (or all) of the fundamental terms of the employee’s employment contract and rely on the offer itself as sufficient legal consideration for such changes?
In the case of Krishnamoorthy v. Olympus Canada Inc., 2017 ONCA 873, Ontario’s top court ruled that it can.
