Beware of verbal promises
Ed Canning Jul 08, 2023
Jane was 63 years old and had worked for a table and desk manufacturer for 36 years. She was a welder.
In the fall of 2017, she received a notice from her employer that her employment was ending eight weeks later. The employer was selling its assets to a new company. The paperwork said if she signed a release, after the eight weeks of working notice she would also be given eight weeks’ pay. She was told by the company purchasing the assets they wanted her to stay on. It was all verbal. She accepted that offer, and once she did, she signed the release. She felt comfortable doing so because the owner of the new company had a meeting and told the existing staff he was offering them work at the same pay and their years of service would be recognized. The next business day after the asset sale, Jane went back to the place she had worked for 36 years. She was not assigned any welding responsibilities but was asked to pack up boxes to move to a new plant. Five weeks after she started working for the new company, she was laid off for the first time in 36 years.
When Jane sued for wrongful dismissal based on her 36 years of service, the employer claimed Jane and the other employees had always known they were only being hired by the new company on a temporary basis to help with a move. The problem is the employer had no evidence of anyone telling the employees that. Clearly Jane would not have released the old company if she thought she was being offered five or six weeks employment and then would be out of a job. The employer tried to argue Jane was hired on a fixed-term contract but had absolutely no evidence of that being communicated to her or the other employees. The judge found the new company had purchased Jane’s old company as a going concern and had failed to communicate she was being hired on a fixed-term contract.
Jane was awarded 12 months’ pay in lieu of notice. If not for the asset sale and the somewhat unique situation Jane was in, she probably would have received 20 months’ notice given her 36 years of service. In my view, Jane should have got that 20 months.
If someone is purchasing a business through an asset sale and taking on existing employees, the onus should be on the new employer to make the offer of employment clear. They are the ones with access to lawyers. All this employer had to do was have Jane sign a letter acknowledging that other than for the purposes of the Employment Standards Act she was starting new employment and addressing specifically what her entitlements would be if she was terminated. It also could have made it clear her employment was expected to be temporary and they were not hiring her as a welder but rather somebody to help them move to a new plant. Rather than doing any of that, the employer gave no information at all and Jane got suckered.
People in Jane’s situation should always consult an employment lawyer. She would likely at least have been alerted to what might come.
Ed Canning practises employment and human rights law with Ross & McBride LLP, in Hamilton, representing both employers and employees. Email him at ecanning@rossmcbride.com.
This article was originally posted on The Hamilton Spectator, where Ed Canning is a freelance contributing columnist.