Various companies by related owners used similar names and employed worker for 38 years without break
A new company carrying on the name of a previous incarnation is a successor employer owing a long-time employee notice of termination, the Ontario Superior Court of Justice has ruled.
Jack King, 75, joined Danbury Sales (1971), a liquidation, appraisal and auctioneering business, in September 1973 as an accountant and bookkeeper. In 1981, King signed a “retirement compensation agreement,” entitling him to retirement compensation if he remained employed with the company until he was 65 years old.
In 1987, a company called Danbury Sales Inc. (DSI) was incorporated by Danbury 1971’s owner. A new owner eventually took over and acquired the rights to the Danbury name and logo from the original owner in 1995. King helped set up the new company’s payroll and other business accounts.
DSI ceased operations in 2001, was replaced by another company called Danbury Industrial, which was then succeeded by Danbury Appraisal in 2005. Danbury Appraisal ceased business in 2011 and was replaced by another company called Danbury Solutions. Each of the companies was incorporated under a different business, but they all had the same owner, and King was ordered to set up the payroll and other accounts for each company. King’s formal employers over the years were Danbury 1971, Danbury Sales Limited, DSI, Danbury Corp., and Danbury Industrial.
After a few years of financial troubles, the owner decided to wind up the business of Danbury Industrial. He terminated all of Danbury Industrial’s employees in October 2011, including King.
A former Danbury Industrial employee who was related to the owner went into the auction business himself and soon other former employees joined. He used the incorporated entity that owned the Danbury name, with the new business name DSL. The new business boasted of the Danbury corporate lineage and had a similar logo, which the owner claimed was to emphasize the connection with former Danbury employees, not the Danbury business. The new company also used the same offices, telephone system and equipment as Danbury Industrial.
When King wasn’t hired by DSL, he filed a claim for wrongful dismissal damages and pension benefits under his retirement compensation agreement. He also argued DSL and the other Danbury companies constituted a common employer that was responsible for the amounts owed to him.
The court noted that Danbury Industrial should be responsible for payment of termination pay, pay in lieu of notice and vacation pay, as it was the employer that terminated King’s employment. However, the company had wound up business and was unlikely to be able to pay anything. Also, the owner of Danbury Industrial claimed the reason for termination was going out of business and it was unrelated to the new venture.
However, the court found DSL was “the current incarnation of the business that (King) worked for over a period of 38 years.” The various incorporated entities with the same owner carried on business under the Danbury name and each new venture had King’s assistance in starting up. As a result, all of the former incarnations were connected and the new DSL company had the groundwork laid by Danbury Industrial and its predecessors, said the court.
In addition, King performed essentially the same tasks for each of the Danbury companies and never received a record of employment — with the exception of one — when one ended and another began. As a result, DSI and its predecessors should be considered successor employers and DSI must honour the retirement compensation agreement and its notice obligations, said the court.
