In Boyce Estate v. 2113626 Ontario Inc. (Hampton Inn and Suites), 2026 ONCA 323, the Ontario Court of Appeal recently upheld the application of the common employer doctrine in the context of a wrongful dismissal claim. This decision is a good reminder that complex corporate structures are not meant to unjustly or unlawfully shield employers from liability.
Background to Boyce Estate
In 2009, Elizabeth Boyce was hired on a three-year fixed-term contract as a manager at the Hampton Inn and Suites in Brantford, Ontario. She was terminated five months after she started working.
The Hampton Inn and Suites was one part of the Bawa family's business. The Bawa family conducted their business through two corporations: 2113626 Ontario Inc. ("211") and 2170990 Ontario Inc. ("217"). Mr. Danny Bawa’s evidence was that 211 and 217 were distinctly separate corporations. In particular, 211 was created to develop the property that would become the Hampton Inn and Suites, and 217 was created to operate the business.
Ms. Boyce initially brought a wrongful dismissal claim against 217. She was successful in obtaining unopposed summary judgment in the amount of $120,000 against 217. 217 admitted that it was her employer. However, it ultimately could not and did not satisfy the judgment against it. Ms. Boyce subsequently sought summary judgment against 211 and Mr. Bawa under the common employer doctrine but died before her claim could be decided. Her estate continued the litigation and was successful against 211.
Ms. Boyce also claimed against Mr. Bawa, but was not successful. The motion judge was clear that the common employer doctrine does not involve piercing the corporate veil.
211 appealed both the decision on the common employer issue and the motion judge's rejection of its argument that res judicata precluded Ms. Boyce from bringing a claim against 211.
In a succinct decision, the Court of Appeal affirmed that the motion judge applied the correct legal test for evaluating whether two companies are common employers and deferred to the motion judge’s decision regarding res judicata.
The Motion Judge's Application of the Test
Relying on Scamurra v. Scamurra Contracting, 2022 ONSC 4222, Justice Spurgeon articulated the test as having two parts:
- Determine whether there is a significant degree of interrelationship and common control between or among the alleged common employers; and
- Assess whether the employee held a reasonable expectation that the other companies or entities were party to their employment contract.
The Court explained that the first prong is a factual determination, while the second prong involves an objective determination of "how each party's conduct would appear to a reasonable person in the position of the other party." The Court provided examples of conduct evincing the interrelated group's intention to contract with an employee, including having control over the selection of employees, payment of wages, method of work, and ability to dismiss.
Justice Spurgeon’s finding that 217 and 211 were common employers was informed by several indicators that 211 was more responsible for the day-to-day operations of the business than Mr. Bawa had originally represented, including that it was the named franchisee for the Hampton Inn and Suites and appeared in business name search results. 211 was also responsible for the business's liquor licence and HST number.
The Court also raised credibility concerns regarding Mr. Bawa's evidence. Before her passing, Ms. Boyce gave evidence that she was concerned 217 had not opposed her summary judgment motion so as to reorganize its affairs and avoid liability. For example, the employment agreement she signed did not identify a particular corporate entity as her employer. In this action, Mr. Bawa produced a job confirmation letter purportedly sent by 217 to Ms. Boyce upon hiring, which specified 217 as her employer. However, the letter was not signed by her, and she claimed to have never received it.
Reliance on Res Judicata Held to be Inappropriate
211 argued at first instance that it should be relieved of any liability on the basis of res judicata. The Court of Appeal agreed with the motion judge's rejection of this argument, on the basis that 211 had not been a party to the original action against 217. This reasoning reveals a conceptual tension, as the Court effectively found that 211 and 217 overlap enough pursuant to the common employer doctrine, but are conversely separate legal entities in each of the claims brought by Ms. Boyce. That tension is not explored further by the Court, however, as it instead focused its reasoning on the equitable reasons for refusing to apply res judicata. The Court held that it would be unfair, "artificial and unjust" to Ms. Boyce or her estate for 211 to be shielded from compensating her when 217 was unable to satisfy the judgment.
Takeaways
While the judgment against the employer in Boyce Estate was bolstered by aggravating facts, such as the suspicious evidence of the employer regarding its intentions and conduct, this case still confirms that the common employer doctrine is alive and well in Ontario.
If employers are concerned about how to manage and limit liability within their corporate structure, they should look to establish and communicate clear lines of responsibility in their employment contracts and relationships with employees. Corporate structuring should be done proactively, and the distinctions between corporations should be intentionally and meaningfully demarcated. This case suggests that courts may not be sympathetic to employers relying generally on the technicalities of corporate structure when that structure is practically meaningless to how an employee would understand their relationship to their employer.
About the Authors
Irfan Kara is an employment lawyer and litigator at Torys LLP. He regularly acts for and advises employers on employment matters across the country including class actions, contracts, restrictive covenants, executive terminations, wrongful dismissal claims, human rights, reprisal and harassment complaints, workplace investigations and employment privacy issues. Irfan also regularly provides advice related to the use and implementation of Artificial Intelligence in the workplace.
Alina Butt is an associate at Torys LLP. She maintains a broad litigation and dispute resolution practice, but with a particular emphasis on advising and helping clients with employment law and human rights issues.
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