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October 5, 2011

Building Services Provider Case to Watch

If you’re a “business services provider” within the meaning of the Employment Standards Act, 2000 and Regulations then you will want to keep an eye out for developments in the Mensur v Vinci Parc (Canada) Inc case.

The case deals with the issue of if, when and from whom is termination and severance pay payable when changes in “building service providers” take place.

The Original Decision

The OLRB set out the facts in the “original decision”:

The applicant had been employed by DomePark Ltd., a building service provider to the Westin Hotel. DomePark Ltd. lost the Westin Hotel contract to VPC. According to the applicant, representatives of VPC made an oral offer of employment which the applicant felt was unfair having regard to her terms and conditions of employment with DomePark Ltd. The applicant filed a claim for severance pay and termination pay. The Employment Standards Officer found that VPC, the new service building provider, had offered the applicant employment that was reasonable in the circumstances, and that therefore VPC did not owe the applicant termination or severance pay.

The Director of Employment Standards asked the OLRB to add Dome Park (the predecessor building service provider) as a party.  That is what this decision dealt with, but in denying the Director’s request, the OLRB made some important comments.

The OLRB noted that, the central issue in the case was whether or not VPC’s offer of employment was reasonable in the circumstances.  According to the OLRB, if it was, the applicant “is not entitled to termination or severance pay from VPC, nor, on my reading of section 75 of the Act, anyone else, including DomePark Ltd.”  If it was not a reasonable offer, again according to the OLRB, “the applicant is entitled to termination pay and possibly severance pay as well.”

But, in saying all that, the OLRB made the following interpretive comment:

There is no fall-back position under the Act, whereby an employee can look to the predecessor building service provider for termination and severance pay in circumstances where the new provider refuses to employ the employee or fails to make a reasonable offer of employment.  In those circumstances, it is the new provider, and the new provider only, that is liable to the employee.  That is the scheme of Part XIX.  It is aimed at ensuring the new provider either employs the employee of the predecessor or makes good on the termination and severance obligations that the predecessor would otherwise have undertaken but for the change in providers.

In other words, the predecessor building service provider (Dome Park) could not be liable to the applicant so long as there was a change in building service providers, and as such the OLRB rejected the Director’s request to add Dome Park as a respondent to the Application.

Reconsideration Decision

The Director of Employment Standards sought reconsideration of the above decision.  The OLRB allowed the Directors reconsideration application, without comment on whether their interpretation of the Act was correct, but because the issue to be decided the raises important policy considerations and that a full hearing on the merits ought to be undertaken.

The OLRB noted that the policy issue (or interpretive issue) was:

…. whether or not the building service provider provisions of the Act effectively “compel an employee to enter into an employment relationship with an entity whom he or she did not voluntarily choose to be his or her employer on pain of forfeiture of his or her termination and severance rights.”

This is clearly an important issue for those employers falling within the “building services provider” sections of the Employment Standards Act, 2000  and RegulationsStay tuned!