Employer found to have acted in bad faith

Transfer of a business from one employer to another did not extinguish the first employer’s obligations
|Canadian Employment Law Today

Mary Danaher was employed for 13 years and 7 months with Colonial Inns Ltd., first as a waitress and later as restaurant supervisor.

In December 1999 Colonial Inns entered into negotiations to sell its restaurant to Moon Palace (2000) Ltd. An oral agreement was reached whereby Moon Palace would lease the restaurant premises from Colonial Inns for five years and operate a Chinese restaurant. A condition of the sale was the retention of Colonial Inns’ restaurant employees, including Ms. Danaher.

From December 1999 to June 2000, Ms. Danaher worked for Moon Palace. On June 4, 2000, she was dismissed from her employment with Moon Palace and received severance pay in the amount of $920. Ms. Danaher brought an action for wrongful dismissal against Moon Palace and Colonial Inns.