In the intricate landscape of employment laws and regulations, understanding the nuances of employment standards is crucial for employers and employees alike. In Alberta, the Employer Standards Code is a framework for employment relationships, outlining employees’ and employers’ rights and responsibilities. 

Among these provisions lies the “single employer” mechanism. This remedy is pivotal in determining employer obligations towards employees, particularly in scenarios involving multiple business entities with common ownership. 

This blog will provide an overview of the single employer provision and explore the operation of this mechanism in light of a recent decision from the Alberta Labour Relations Board. 

What is a “Single Employer” Declaration?

Section 80(1) of Alberta’s Employment Standards Code states that:

​​“If, in the opinion of an officer, a business, undertaking or other activity is carried on or has been carried on by or through 2 or more employers or other persons, or a combination of them, the officer may make a single employer declaration, declaring that the employers or persons named, or combination of them, are a single employer for the purposes of this Act.”

The “single employer” mechanism ensures that an employee can recover amounts owed to them when a corporation that owes the funds runs out of money for any reason. This provision is crucial when multiple corporations are involved and associated with the employer’s company.

It is important to note that claims under the Employment Standards Code are generally for statutory minimum amounts, and therefore, the single employer declaration will not help an employee seeking severance in civil litigation. Employees seeking damages for a wrongful termination can seek a similar remedy called “common employer” at common law; however, this can be more difficult to establish. 

Three Companies With Same Director Considered “Single Employer”

In the matter of 1605511 Alberta Ltd. v. Director of Employment Standards, the employee (“OR”) was employed by the appellant (“1605511”) from March 15, 2021, to October 31, 2022, as a scale-house attendant. 1605511 operated a construction waste recycling business until September 2022, when it relocated to a new location in Calgary. 

A new business (“2409421”) was incorporated in 2022 as a holding company to purchase the property, and subsequently, 1605511 became a tenant of 2409421. In 2020, another business (“578267”) commenced a roofing business. In March 2023, 578267 stopped its roofing business and began operating a roof shingle recycling operation.

“GW” was the director of all three companies, and his residence was the registered office for all three companies. 

Corporate Entities Ordered to Pay Employee $800

In 2018, 1605511 registered the trade name “North Calgary Recycling.” In 2022, 2409421 registered the same trade name. GW explained that the company needed the name for a money transfer in relation to an equipment purchase. 2409421 did not have any employees and was not registered with the Workers’ Compensation Board (“WCB”). However, both 1605511 and 578267 were registered with WCB under separate registration numbers. 

On June 27, 2023, the Employment Standards Officer directed the three companies, as OR’s employer, to pay him $800 in lieu of notice of termination. This came after 1605511 issued OR a temporary layoff notice in October 2022. Per section 63 of the Employment Standards Code, an employee laid off for one or more periods exceeding 90 days within a 120-day timeframe is terminated. As such, OR was terminated in January 2023. 

While there was no question as to the amount owed to OR, there was a question as to whether the corporate entities should be considered a single employer in accordance with section 80 of the Employment Standards Act.

Factors to Consider When Assessing the Single Employer Mechanism

The matter came before the Alberta Labour Relations Board when the companies sought to appeal the Employment Standards Officer’s declaration that they were a “single employer”. When assessing the matter, the Alberta Labour Relations Board first looked to section 80(1) of the Employment Standards Code. It then referred to the 2019 case of Cedar (Stampede Cleaning Services) v Director of Employment Standards, which explained when section 80 may be invoked. Specifically, this decision identified the following five conditions that must be met before an Employment Standards Officer can exercise their power under section 12(1):

  • there must be more than one business entity involved;
  • each of the separate entities must be or have been actively involved in business whether currently or at some time in the past;
  • the activities or businesses of the various entities must be carried on under common control or direction (this may extend beyond ownership in a strict legal sense as financial control and matters such as shareholdings and ownership of assets relevant considerations);
  • the activities or businesses carried on by the various business entities must be associated or related in their functions or operations; and
  • the individual whose rights or benefits are in dispute must be or have been an employee of the corporations, individuals or firms involved.

Labour Relations Board Affirms Single Employer Declaration

The Alberta Labour Relations Board then applied these factors to the facts at hand, finding that:

  • GW was a director and directing mind of both 1605511 and 2409421;
  • Both companies have the same registered office;
  • 1605511’s construction waste recycling business was carried out at the premises owned by 2409421; and 
  • 2409421 registered a trade name with the Alberta Corporate Registry which was the same name used by 1605511.

Ultimately, the Employment Standards Officer’s declaration was upheld. The Alberta Labour Relations Board found the evidence to establish a “common thread of control or ownership running throughout” the three entities that are sufficient to ground a single employer declaration under section 80 of the ESC.” Accordingly, the different corporate entities were considered a “single employer” so the employee could recover the funds owed to him from the entity that had the funds to pay.

Contact Getz Collins and Associates for Advice on Employment Disputes in Strathmore and Calgary

The skilled labour and employment lawyers at Getz Collins and Associates provide a full range of labour and employment law services. Whether representing an employee in a labour relations board hearing or helping employers navigate the collective bargaining process, we provide each client with community-based responsiveness and tailored legal solutions. With offices in Calgary and Strathmore, Getz Collins and Associates proudly serves clients in communities throughout Alberta, including Airdrie, Cochrane, Okotoks, Drumheller, Chestermere, Hussar, and the surrounding areas. Contact us online or at (587) 391-5600 to speak with a team member regarding your workplace matter.