In the decision 2108805 Ontario Inc. v.
Boulad rendered on January 25, 2016, the
Quebec Court of Appeal overruled the trial judge who had considered
that the change of employer resulting from a change of ownership
constituted a unilateral and substantial modification of Mr.
Boulad's essential terms and conditions of employment and
therefore awarded him an indemnity in lieu of notice of termination
of employment equivalent to 24 months of salary and benefits.
Mr. Boulad was director of a hotel owned by the Westmount
Hospitality Group ("Westmount") an
important international hotel group. Westmount sold the hotel for
which Mr. Boulad was responsible to Jesta, a much smaller hotel
group. Pursuant to the transaction and to section 2097 of the
Civil Code of Quebec ("CCQ"),
Jesta undertook to continue Mr. Boulad's employment under the
same terms and conditions of employment. Mr. Boulad refused to
pursue employment with Jesta and asked Westmount to relocate him at
another hotel or pay him a severance package. Westmount denied Mr.
Boulad's request as it considered his employment was being
continued with Jesta pursuant to section 2097 CCQ. Mr. Boulad sued
Westmount claiming that the change of employer amounted to a
constructive dismissal, namely considering the loss of prestige
associated with his employment with an important hotel group and
the loss of transfer and promotion opportunities at the
In its decision, the Court of Appeal confirmed the imperative
and declaratory nature of section 2097 CCQ which stipulates that
the employment contract continues to be in force and binding
following the alienation of an enterprise.
The change of employer shall not be considered a substantial
modification of the essential terms and conditions of employment
for the sole reason that the new employer becomes the debtor of the
previous employer's obligations. The Court of Appeal also
acknowledged that a business is not static and may evolve through
time. The workplace atmosphere and environment, as well as transfer
and promotion opportunities are generally not part of the terms and
conditions of employment unless expressly stipulated in the
employment contract. In this particular case, the evidence fell
short from demonstrating that Westmount and Mr. Boulad had agreed
to such considerations being part of the terms and conditions of
employment. Both Westmount and Jesta abided by their legal
obligations pursuant to section 2097 CCQ and Mr. Boulad could not
legally or contractually require Westmount to relocate him or pay
him severance. Mr. Boulad's refusal to work for Jesta therefore
constituted a voluntary resignation.
Accordingly, an employee who does not wish to continue
employment with a successor employer may resign from employment but
will have no recourse against the vendor or the purchaser, subject
to specific undertakings in the employment agreement.
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