An Ontario judge in de Kever v. Nemato Corp. 2014 ONSC 6576 (CanLII) recently reviewed the law applicable to the so called common employer doctrine. Ms. de Kever sued for a declaration that all the Defendants were her common employer and she sues for damages for wrongful dismissal.
The leading case in the area is Downtown Eatery (1993) Ltd. v. Ontario, 2001 CanLII 8538 (ON CA) where the Court of Appeal noted:
The common employer doctrine, in its common law context, has been considered by several Canadian courts in recent years. The leading case is probably Sinclair v. Dover Engineering Services Ltd. (1987), 1987 CanLII 2692 (BC SC), 11 B.C.L.R. (2d) 176 (S.C.), aff'd (1988), 1988 CanLII 3358 (BC CA), 49 D.L.R. (4th) 297(B.C.C.A.) ("Sinclair"). In that case, Sinclair, a professional engineer, held himself out to the public as an employee of Dover Engineering Services Ltd. ("Dover"). He was paid by Cyril Management Limited ("Cyril"). When Sinclair was dismissed, he sued both corporations. Wood J. held that both companies were jointly and severally liable for damages for wrongful dismissal. In reasoning that we find particularly persuasive, he said, at p. 181:
The first serious issue raised may be simply stated as one of determining with whom the plaintiff contracted for employment in January of 1973. The defendants argue that an employee can only contract for employment with a single employer and that, in this case, that single entity was obviously Dover.
I see no reason why such an inflexible notion of contract must necessarily be imposed upon the modern employment relationship. Recognizing the situation for what it was, I see no reason, in fact or in law, why both Dover and Cyril should not be regarded jointly as the plaintiff's employer. The old-fashioned notion that no man can serve two masters fails to recognize the realities of modern-day business, accounting and tax considerations.
There is nothing sinister or irregular about the apparently complex inter-corporate relationship existing between Cyril and Dover. It is, in fact, a perfectly normal arrangement frequently encountered in the business world in one form or another. Similar arrangements may result from corporate take-overs, from tax planning considerations, or from other legitimate business motives too numerous to catalogue.
As long as there exists a sufficient degree of relationship between the different legal entities who apparently compete for the role of employer, there is no reason in law or in equity why they ought not all to be regarded as one for the purpose of determining liability for obligations owed to those employees who, in effect, have served all without regard for any precise notion of to whom they were bound in contract. What will constitute a sufficient degree of relationship will depend, in each case, on the details of such relationship, including such factors as individual shareholdings, corporate shareholdings, and interlocking directorships. The essence of that relationship will be the element of common control.
The Court in de Krever stated that the common employer doctrine imposed “joint and several liability for breaches of an employment contract on the legal entities who had a meaningful role to play in the employment relationship.”
The Court refused to strike out the statement of claim as disclosing no cause of action. Of particular note is that the Court even refused to strike out the claim against an individual defendant who was “the founder, owner and controlling and directing mind of the corporate Defendants”. The Court observed that:
Although at the hearing of the motion, the Honourable Justice Paul M. Perell indicated that he thought that the claim against the individual defendant was deficient and should be struck without leave to amend, he "changed my mind after re-reading Downtown Eatery (1993) Ltd. v. Ontario, and I noted that the action against Messrs. Grad and Grosman was dismissed [in that case] because of an estoppel and the Court of Appeal left open the issue of whether the common employment doctrine might apply to the owners of the group of common employers." It was, therefore, not plain and obvious that the claim against the individual defendant should be struck.
The common employer doctrine, while not widely, applied is important to bear in mind. On a motion to strike, the pleading is looked at “on its face” and the Court is called on to determine whether it is “plain and obvious that Ms. de Kever has not shown a reasonable cause of action based on the common employer doctrine against” the defendants.
The Court dismissed the motion.