The Court of Appeal (“CA”) recently released a decision, Antchipalovskaia v. Guestlogix Inc., which
overturned a motion judge’s finding on an employee’s applicable common law notice period upon
termination.

The employer, Guestlogix Inc., appealed a finding of 12-months’ notice awarded to the employee,
Marina Antchipalovskaia. The employer did not appeal the motion judge’s finding that the termination
provisions in the employee’s contract were not compliant with the minimum standards set by the
Employment Standards Act, 2000 (“ESA”). The substance of this appeal instead focused on the notice
period awarded and the employer’s contention that the motion judge erred in their analysis.

Both the motion judge and the CA considered several factors such as the employee’s age, length of
service, character of employment, and availability of similar employment, to assess reasonable notice.
However, there were additional considerations and they weighed certain factors differently.

Background

Marina was employed by Guestlogix from 2011 to 2019. However, in 2016 the business faced financial
difficulties and obtained protection from creditors in 2016. Later that year the court approved a share
purchase. The court approved plan entailed a release of liability for claims by employees arising before
implementation of the agreement. Shortly after, Marina was terminated and informed that she could
submit a proof of claim under the Companies’ Creditors Arrangement Act, R.S.C., 1985, c. C-36 (the
“CCAA”). Through this process she obtained roughly 72% of her ESA entitlements and she executed a
release.

Thereafter Marina was sent an offer of employment which stated that her “start date” is reset to
September 22, 2016 and that this is the effective date for all employment related matters.
Approximately 2.75 years after she began working under this new arrangement, Marina was terminated.
Notably, the employer paid Marina her ESA notice and severance pay based on the 2011 start date,
minus any amounts she was already paid under the CCAA process. Marina remained unemployed for 12
months.

Motion Judge

Upon determining that the termination provisions in Marina’s contract were unenforceable, the motion
judge proceeded to assess her reasonable common law notice period. In additional to the factors listed
above, the judge noted the following:

  • Marina’s Record of Employment lists 2011 as her start date;
  • The employer calculated ESA entitlements based on the original hire date;
  • The new employment agreement referred to “offered continued employment” and Marina as a
    “retained employee”; and
  • Marina had not considered the significance of the court ordered release.

The Court of Appeal

In sum, the CA held that the motion judge erred by not considering the release with more weight.
Marina not having time to meaningfully understand the release was irrelevant because the was release
was made by court order approving the plan, and not based on the approval of individual creditors. That
said, the release was an important but not determinative factor.

In review of prior caselaw, the CA stated that the assessment of an appropriate common law notice
period is a flexible approach. While successor employers inherit the liabilities of predecessors under the
ESA, at common law a change in identity of the employer entails a constructive dismissal. This means
that at common law the employment is not deemed to be continuous. Regardless, in circumstances
where an employee is rehired in this context, the previous employment may still be relevant to
determine the common law notice period because of the experience and benefit the employee brings to
the new owner.

While the CA recognized cautionary approach in reassessing common law notice awards, in this case
there was an significant error and the notice period was reassessed to 7 months.

Takeaway

This recent case demonstrates the importance of employees obtaining recognition of prior service when
an employer undergoes internal changes or is engaged by a new owner. While the ESA offers stricter
statutory protection, employees seeking to preserve their common law rights should turn their mind to
any releases or other representations that may limit those rights. Ultimately a court is likely to consider
these factors in determining common law notice periods.

Employers should be mindful of keeping employment contracts up to date to avoid the possibility that
termination provisions that contract out of common law rights become unenforceable. In cases where
there is a change in ownership, bankruptcy/insolvency proceedings, or there is a reason to outline a new
employment relationship, clarity in respect of releases and the correct drafting of successive
employment contracts is important to limit the scope of common law notice, if any.


Authors: Dilpreet Grewal & Jonquille Pak