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Alberta ESC Appeal Confirms Continuous Employment In Asset Sale
Certified Redi-Mix Concrete Group v L’Hirondelle, 2022 CanLII 79247 (AB ESA) (Johnson, KC, Vice Chair), is a new Alberta Employment Standards Code appeal where it was determined that an asset sale of a business did not interrupt the employee’s continuous employment for the purpose of the protections of the Employment Standards Code.
This case is important because it illustrates the operation of some of the protections for employees outlined in the Employment Standards Code.
The following are the pertinent facts found by the Alberta Labour Relations Board:
- The complainant employee worked as the general manager of a concrete company with a concrete production plant, called Transload Services, starting in 2017
- In July, 2019, Certified Ready-Mix purchased the assets of Transload Services
- The complainant’s employment, including compensation and duties, remained the same after the asset purchase
- In December, 2019, the complainant was advised that he was being laid off from employment in order for the employer to do maintenance on its trucks
- Historically, many employees were laid off over the winter because the plant was not winterized. However, typically the complainant was not laid off, but did paperwork, provided quotes to customers, and directed some of the drivers who worked over the winter to pick up concrete loads from third-party plants and deliver to the employer’s customers
- The complainant returned to work in April of 2020. Within a few months he was demoted, then had his compensation cut, then went on leave and advised the employer that he was rejecting the demotion
- The complainant filed an employment standards complaint for vacation pay and termination pay
- The complainant was successful on all claims in front of an employment standards officer
The employer appealed regarding termination pay, claiming that the complainant had quit so he should get nothing, but even if he did not quit, he was a seasonal employee and only worked for the employer from July, 2019 (the time of the asset purchase), so should get less termination pay.
Analysis / Conclusion
Vice Chair William Johnson, KC, determined that the complainant employee was not a seasonal employee because he was not ordinarily laid-off when everyone else was. He further determined that the complainant had not “quit”: the employer changed his duties and compensation without notice, so he was actually constructively dismissed and able to claim for termination of employment.
The Vice Chair went on to find that the complainant was had been continuously employed with the employer from his 2017 start date until constructive dismissal, reasoning as follows:
 Section 5 of the ESC states:
5 For the purposes of this Act, the employment of an employee is deemed to be continuous and uninterrupted when a business, undertaking or other activity or part of it is sold, leased, transferred or merged or if it continues to operate under a receiver or receiver-manager.
 As the Respondent was not terminated by his previous employer and as he continued to work with the Appellant, the Respondent’s employment is considered to be continuous. Further as the Respondent’s compensation, duties and job title remained the same as they had been prior to the sale of the assets to the Appellant, the Respondent’s terms of employment remained the same.
Given the wording of Section 5 of the ESC, this result is not surprising. However, some of the caselaw from the common law draws a distinction between a “share sale” and an “asset sale”: with a share sale, all rights and liabilities from the predecessor flow to the successor corporation, including the liabilities from accrued rights of employees; whereas with an asset sale, many rights and obligations do not flow to the purchaser from the seller, and some common law cases have considered that change in the legal identity of the employer to be a termination of employment, where employment starts fresh.
The main reason I was interested in this one because the principle at play is important but has not always been applied consistently in the context of the common law. One could argue that if a successor employer gets an employee to sign a contract claiming the employment terminated at the time of the sale, that such an agreement would violate the ESC be therefore void… but that is for another day.
Bow River Law provides these regular legal blog articles for the purposes of legal education and research for the public and the legal profession. These articles should be considered general information and not legal advice. If you have a legal problem, you should speak to a lawyer directly.
Bow River Law is a team of knowledgeable, skilled and experienced lawyers handling employment law, human rights (discrimination) and labour law matters. Bow River Law is based in Calgary but we are Alberta’s Workforce Lawyers.