A surprising recent decision from Quebec's Superior Court,
Boulad c. 21008805 Inc.1 provides some food for thought
about what happens to a company's employees after the sale of
While section 2097 of the Civil Code of Quebec
stipulates that a contract of employment is not terminated
following the sale of a business, and in fact that the employment
contracts are binding on the successor of the employer, this case
appears to indicate an employee's choice about whether or not
to follow the new employer and that his refusal to do so, following
certain proposed changes to his position, is not tantamount to a
resignation. Furthermore, the court held that the employee's
refusal to continue his employment with his employer's
successor did not represent a failure of his duty to mitigate his
The facts presented in this case are not uncommon. Mr. Boulad
held an executive position within the Hilton chain of hotels at the
time the company sold its Canadian properties to the defendant,
Westmount Hospitality Group ("Westmount"), in 2006. Mr.
Boulad then chose to remain in his position as Director of
Operations. Three years later, however, when Westmount announced
that the hotel he operated was to be sold to Jesta Group
("Jesta"), he informed his employer that he did not wish
to continue his employment under the new ownership. He justified
his decision based on the fact that Jesta's reputation was not
as recognized as his former employer and that continued employment
under their banner would be detrimental to his career.
Mr. Boulad later filed a constructive dismissal claim against
his former employer Westmount and his new employer Jesta, in the
fall of 2010.
The trial judge was of the opinion that the sale of the hotel to
Jesta substantially altered an essential term of Mr. Boulad's
employment contract, giving rise to a legal remedy on the grounds
of constructive dismissal.
Justice Beaugé emphasized the fact that while minor
changes in the working conditions and responsibilities of a
director through a change in ownership cannot amount to a
constructive dismissal, the identity and reputation of his/her
employer may be of paramount importance for an employee concerned
with the progression of his/her career. The Court held that the
identity of Mr. Boulad's employer was central to his contract
and accordingly constituted one of its essential terms. Although
Mr. Boulad would have maintained title and salary with Jesta, these
conditions were stripped of their meaning under Jesta's less
Westmount argued that, by failing to find work without delay,
Mr. Boulad had not fulfilled his duty to mitigate his damages.
However, the Court ruled in favor of the employee on this point,
stating that Westmount failed in its burden of proving both
insufficient efforts on the part of Mr. Boulad's to find new
work, and the likelihood that he would have been able to obtain
comparable alternative employment. Furthermore, the court held that
Mr. Boulad's obligation to mitigate his damages did not go so
far as to require him to consent to his transfer to Jesta.
In short, the court held that under the particular circumstances
of this case, Mr. Boulad was well within his rights to refuse the
transfer and that such a refusal was not a resignation, but rather
constituted a constructive dismissal given the position and
conditions of employment under the Jesta banner. The court awarded
Mr. Boulad termination indemnity equivalent to 24 months which
represented over $295,000 for loss of wages, bonus and retirement
Westmount filed a leave for appeal of this decision on June 3,
2014. We will keep you apprised of the progress of this case as it
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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