Abbott v. Bombardier Inc.

In this matter Ken represented a group of former employees of the information technology division of Bombardier Inc.

On July 11, 2003, Bombardier entered into an agreement with Conseillers en Gestion et Informatique CGI Inc. to transfer the Bombardier ITS Group to CGI. Under this agreement, significant assets (such as computer servers, a mainframe, computers, etc.) were to be transferred to CGI while CGI agreed to offer full-time employment to 194 members of Bombardier’s former information technology employees.

CGI agreed to recognize the original date of hire of the employees with Bombardier for both the purpose of determining notice of termination and severance pay under employment standards legislation and for common law purposes.

This was important because the starting date of employment is one of the factors used in determining the amount of pay in lieu of notice a employee would be entitled to. The longer an employee has been employed, the more pay in lieu of notice an employee is entitled to if terminated.

If an employer is bought out by another company and if the new employer fails to recognize the earlier start date, the employee’s entitlement to pay in lieu of notice may be compromised.

On July 10, 2003 the employees were given approximately eight weeks’ notice that their employment with Bombardier would be terminated on September 7, 2003.

Also, they were advised that they would receive offers of employment from CGI on equivalent terms and conditions to perform the same kind of work as they had performed at Bombardier.

On or about August 13, 2003 the employees received offers of employment from CGI all of which were accepted. They started work at CGI and were working at CGI at the time this action was commenced.

On or about March 5, 2004 the employees started litigation against Bombardier in they claimed statutory severance payments in accordance with the Employment Standards Act, 2000, S.O. 2000, c. 41.

“7       On or about March 5, 2004 the plaintiffs commenced this action against Bombardier in which they claim that they were entitled to receive from Bombardier the statutory severance payments provided for in Part XV in the ESA. Section 64 of Part XV of the ESA provides that an employer who severs an employment relationship with an employee shall pay severance pay to the employee under the conditions set out in the section.”

The main issue to be determined was if Bombardier sold a business or part of a business to CGI. This was due to the position taken by Bombardier with respect to Section 9 of the Employment Standards Act:

“8        The defendant concedes that but for the application of section 9 (1) of the ESA the plaintiffs would be entitled to severance pay in accordance with the provisions of section 64 of the ESA. The defendant, however contends that the plaintiffs are not entitled to severance pay because of the provisions of section 9 of the ESA which in pertinent part provides as follows:

9 (1) If an employer sells a business or a part of a business and the purchaser employs an employee of the seller, the employment of the employee shall be deemed not to have been terminated or severed for the purposes of this Act and his or her employment with the seller shall be deemed to have been employment with the purchaser for the purpose of any subsequent calculation of the employee’s length or period of employment.”

The plaintiffs took the position that Section 9 does not apply as Bombardier did not sell a business or part of a business to CGI. Additionally, the plaintiffs took the position that the terms and conditions of their employment with CGI were substantially different from the terms and conditions of their employment with Bombardier and CGI did not employ them outlined in of section 9 of the Employment Standards Act.

This matter proceeded by summary judgment motion and the Honourable Justice Spiegel found that the transaction between Bombardier and CGI constituted a sale of a business:

“24     In my opinion the transaction between the defendant and CGI constituted a sale of business for the purpose of section 9 of the ESA. It involved the transfer of a “specific bundle of tasks and functions performed by an identifiable group of employees”. As in Merrill Lynch all of the affected employees were re-employed by CGI and continued to apply essentially the same skills and functions and in many cases used the same facilities and equipment. It should be noted that Bombardier also transferred significant assets to CGI including servers and a mainframe as well as desktop and laptop computers. I find that Bombardier sold a part of a business to CGI within the meaning of section 9 (1) of the ESA.”

Justice Spiegel also found that if an employee accepts employment with the purchaser, it is irrelevant that the terms and conditions of his or her employment are different from those that existed with the seller:

 “35     I therefore hold that if an employee accepts employment with the purchaser that it is irrelevant that the terms and conditions of his or her employment are radically or fundamentally different from those that existed with the vendor.”

Another issue the Court considered was whether the terms and conditions of their employment of CGI are so different from their employment with Bombardier that the provisions of Section 9 were not applicable. Justice Spiegel decided as follows:

“40 There has been no cross examination on any of the affidavits. In my view the burden is upon the plaintiffs to satisfy the court that the terms and conditions of their employment with CGI are so radically or fundamentally different from that which they enjoyed with Bombardier that the provisions of section 9 (1) of the ESA are not applicable. I am of the opinion that the plaintiffs have failed to satisfy this burden.”

Bombardier was granted summary judgment and the plaintiffs’ case was dismissed:

“41     In the result the defendant is entitled to summary judgment dismissing the action of the plaintiffs. The plaintiffs’ cross motion is dismissed.”

The plaintiffs appealed to the Ontario Court of Appeal. Notwithstanding the plaintiffs’ belief that they had a strong case, the Court of Appeal dismissed the appeal. This case is an important reminder of the uncertainty of litigation and the importance of determining when and for what entity your employment commenced.

Full citations:
Abbott v. Bombardier Inc., 2005 CarswellOnt 2148, 41 C.C.E.L. (3d) 106
Abbott v. Bombardier Inc., 2007 CarswellOnt 1815, 2007 ONCA 233, [2007] O.J. No. 1173