Ontario courts have determined that an employee may simultaneously have more than a single employer and must regularly consider what makes two organizations common employers. A seminal statement on common employers was articulated by the Ontario Court of Appeal: “If an employer is a member of an interrelated corporate group, one or more other corporations in the group may also have liability for the employment obligations. However, and importantly, they will only have liability if, on the evidence assessed objectively, there was an intention to create an employer/employee relationship between the employee and those related corporations.”[1]

The Ontario Court of Appeal also recently explained what factors and evidence contribute to companies being grouped together as common employers. In Rahman v Cannon Design Architecture Inc., 2022 ONCA 451, Rahman held the position of Senior Architect, Principal and Office Practice Leader at CannonDesign. She was terminated without cause and brought a wrongful dismissal claim against Cannon Design Architecture Inc. (“CDAI”), Cannon Design Ltd., and The Cannon Corporation (together referred to as “the Companies”).

In the statement of claim, Rahman stated that all three companies were common employers because they were closely connected, and, accordingly, they should be jointly and severally liable for her termination entitlements.

At the summary judgement motion the judge found that CDAI was Rahman’s sole employer on the basis that it was the company that paid her and it was CDAI who offered her employment. The judge found that CDAI being a subsidiary within a business grouping was not enough to cause all three businesses to be jointly and severally liable. Thus, it was held that CDAI was solely responsible for Rahman’s termination entitlements.

On appeal, the motion judge’s decision was overturned. The Ontario Court of Appeal found that the Companies had a high level of integration based on the following factors:

  • Rahman’s written Officer Agreement refers to The Cannon Corporation as her employer (her Offer Letter refers to CDAI as the employer);
  • The Officer Agreement was on Cannon Design letterhead;
  • The Officer Agreement was signed on behalf of the employer by an Executive Director at The Cannon Corporation;
  • The Offer Letter and Officer Agreement were both presented to Rahman by The Canon Corporation;
  • The Benefits and Compensation Senior Associate at The Cannon Corporation managed and administered the compensation and benefit programs for Rahman;
  • Rahman’s bonus was partially based on the performance of The Canon Corporation;
  • Pay statements did not list an employer name and featured a “CANNONDESIGNS” logo;
  • CannonDesign operated using its “Single Firm Multiple Offices” business strategy, requiring that all of CannonDesign’s many offices be interdependent and work in conjunction with one another;
  • CannonDesign’s website listed all employees, including Rahman, by reference to the “CANNONDESIGN” or “CD” logo;
  • The termination letter was on “CANNONDESIGN” letterhead and “Cannon Design” or “CannonDesign” was referred throughout. The first line of the termination letter reads as follows: “It is with regret that we confirm the difficult conversation regarding your position as a Principal of The Cannon Corporation”; and
  • Rahman regularly attended meetings with other The Cannon Corporation managers.

The Court of Appeal found that these factors demonstrate that the Companies collectively intended to create an employer/employee relationship with Rahman. As such, the Companies were held to be jointly and severally liable for any of Rahman’s termination entitlements.

Takeaway

Organizations that are closely intertwined may be considered common employers and held jointly and severally liable to employees. Employers are encouraged to seek legal counsel in assessing the risk of this and in taking steps to ensure such organizations are not found to be common employers at common law. The lawyers at Heeney Vokey LLP would be more than happy to assist with this.

[1] O’Reilly v ClearMRI Solutions Ltd., 2021 ONCA 385.