In the event of a termination without cause, employees are generally entitled to a reasonable notice period. The purpose, of course, is to provide dismissed employees with an opportunity to find alternative suitable employment. At common law, reasonable notice periods are calculated with reference to a number of well-known considerations, including:
- The character of the employment;
- The employee’s length of service;
- The employee’s age; and
- The availability of similar employment.
However, imagine that you have worked with your employer a very long time when, suddenly, the employer’s business is bought by somebody new. The purchaser then offers to continue your employment, and you agree. What happens to the length of service you’ve accumulated with the prior employer? Do you have to start all over?
To find our answer, we will turn to Kitchen v Brandt Tractor Ltd., a decision of the Court of Queen’s Bench of New Brunswick, where a scenario similar to this took place.
Mr. Kitchen was an employee of Wallace Equipment Ltd., a company specializing in the sale of heavy equipment. Mr. Kitchen had worked there for eight years when the company was purchased by somebody new: Brandt Tractor Ltd. Brandt, the new owners, offered Mr. Kitchen continued employment following the purchase, and he agreed. Three years and eight months later, Brandt terminated Mr. Kitchen without cause. He was provided four weeks’ working notice.
Mr. Kitchen’s length of service with Brandt was just under four years. If, however, his time with Wallace is included in calculating his total length of service, he would have just under twelve years’ worth of service. This could significantly alter the period of reasonable notice he was entitled to. Of course, Mr. Kitchen took the position that his length of service with Wallace should be included. Was he right?
Should Mr. Kitchen’s Prior Years of Service with Wallace be Included for the Purpose of Calculating Reasonable Notice?
Mr. Kitchen relied on a decision of the New Brunswick Court of Appeal to show that his prior years of service with Wallace should be included. In that decision, the Court of Appeal discussed the common law with respect to successor employers (such as Brandt):
“At common law, a contract of employment for personal service is not assignable without the consent of both parties, so that, where there is no such consent, a sale or transfer of a business from an employer to another terminates the contract of employment with the employee. At that point, the employee is entitled to sue the vendor or transferor for wrongful dismissal and damages in lieu of notice. If the purchaser of the business continues to employ the employee, there is an implied term in the new contract that the employee will be credited with the past years’ service with the vendor or transferor on such matters as notice of termination, unless the employee is expressly advised otherwise. Once the employee accepts employment with the successor employer, however, a new contract of employment is created and the employee, as against the new employer, would lose whatever benefits had accrued by way of the length of service with his previous employer if properly informed by his new employer.”
Based on the above, where an employee continues working for a successor employer, even one who, like Brandt, purchased the assets of the predecessor employer, there is a rebuttable presumption that the previous years of service count towards calculating reasonable unless the successor employer has advised the employee otherwise.
Therefore, the question becomes whether or not Brandt rebutted the above presumption by informing Mr. Kitchen that his service with Wallace would not count towards reasonable notice. The trial judge looked at the employment contract to determine whether it expressly excluded Mr. Kitchen’s years of service with Wallace from the calculation of reasonable notice on termination. The trial judge held that the employment offer made by Brandt to Mr. Kitchen was not sufficient to put him on notice that, if he accepted employment, his prior years with Wallace would be discounted.
For that reason, his years of service with Wallace were included. Despite working with Brandt for less than four years, Mr. Kitchen was credited with eleven years and eight months of service in calculating his reasonable notice period.