In a recent decision the British Columbia Supreme Court applied the common law doctrine of common employer to find two related companies jointly liable for damages payable to a former employee who had been wrongfully dismissed.
The Court found that even though the employee’s contract was with only one of the corporate entities, the common employer doctrine could be applied to make other related entities liable. The Court noted that the development of the common law doctrine of common employer in wrongful dismissal cases was in step with the recognition of the concept in statutes such as the Employment Standards Act.
In order for two corporate entities to be jointly liable under the common employer doctrine, there must be evidence that they are under common control or direction. Factors that indicate common control or direction include common shareholdings, interlocking directorships, shared location and evidence that the entities carry on one enterprise or business.
In this case, the Court found sufficient evidence of common control or direction to apply the doctrine. The Court concluded that both corporate entities were liable for damages awarded to the employee in his wrongful dismissal suit.