Can an employee who has served as an employee of a bankrupt subsidiary of a corporation for more than a decade be held liable for breach of contract by that bankrupt subsidiary?

Alberta, Canada


The following excerpt is from Olson v. Sprung Instant Greenhouses Ltd., 1985 CanLII 1257 (AB QB):

In Bagby v. Gustavson Drilling, supra, at p. 199, Laycraft J.A. stated: … the realities of modern business life … require us to recognize the existence of the modern corporate conglomerate and its business practises. It is common place for an employee to spend a lifetime with essentially one employer. Yet from time to time he is transferred to the employ of one associated company after another as the interests of the group as a whole may require. If at some point in his career, the employee finds that the particular corporate entity which is at the moment his nominal employer is bankrupt, it would be unrealistic as well as unjust to ignore his past service with other entities of the conglomerate. The law must, in my opinion, recognize the reality that though he may have worked only a few months for the bankrupt subsidiary, he has served the group as a whole for a lifetime. We are entitled to ask: In substance who is his employer? Liability for contractual obligation should flow from that answer.

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