Tuesday 22 June 2021

Canada: Ontario - separate legal personality and the common employer doctrine

The Court of Appeal for Ontario gave judgment earlier this month in O'Reilly v. ClearMRI Solutions Ltd., 2021 ONCA 385. Of note is the discussion by Zarnett JA concerning the common employer doctrine and the separate legal personality of companies in group structures.  To quote directly (at [45] and [49]-[50]): 

Ontario law rejects a “group enterprise theory” under which related corporations that operate closely would, by that very fact, be considered to jointly own their businesses or be liable for each other’s obligations. Although the group might, from the standpoint of economics, appear as a unit or single enterprise, the legal reality of distinct corporations governs ... The common employer doctrine does not involve piercing the corporate veil or ignoring the separate legal personality of each corporation. It imposes liability on companies within a corporate group only if, and to the extent that, each can be said to have entered into a contract of employment with the employee ... Thus, consistent with the doctrine of corporate separateness, a corporation is not held to be a common employer simply because it owned, controlled, or was affiliated with another corporation that had a direct employment relationship with the employee. Rather, a corporation related to the nominal employer will be found to be a common employer only where it is shown, on the evidence, that there was an intention to create an employer/employee relationship between the individual and the related corporation ...".

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