A recent case out of the Court of Appeal for
British Columbia has confirmed that where a business is not sold as
a going concern, an employee's years of service recognition
resets, regardless of whether that employee takes on employment
with the successor company.
The case involved the sale of a pulp mill from one business, in
the process of winding up, to another. The employee, who had over
24 years of service at the mill, was faced with the option of
staying on with his employer at another work site or seeking
employment with the new owner of the mill. In choosing the
latter, the employee and management negotiated a severance package
which included a lump sum payment equal to 14 months salary.
Several months after starting work with the new owner of the mill,
the employee was terminated and received payment in lieu of one
week's notice. The employee commenced a wrongful dismissal
proceeding on the grounds that the notice failed to recognize his
24 years of service.
The trial judge determined that the sale of the mill included an
implied term deeming the new owner to have contracted with
employees on the basis that they would be given credit for past
years of service. The Court of Appeal set aside the decision,
holding that an implied recognition of years of service only
applies where the business is sold as a going concern. Here,
the pulp mill had ceased operation and had been decommissioned
months before the new owner took over. Moreover, the employee was
not entitled to notice recognizing his 24 years of service because
he had already received fair compensation for it in the form of a
This article was written with the assistance of Erika
Anscheutz, summer student.
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