Developments In Personal Liability Of Directors For Unpaid Wages

At law, corporations are treated as separate legal entities. This means that individuals acting on behalf of a corporation, such as directors, are generally protected from personal liability for wrongful acts committed by the corporation. Nonetheless, there are certain scenarios that "pierce" this "corporate veil" and can expose a director to personal liability.  One of the most significant and frequently discussed aspects of personal liability of directors is the liability for unpaid employee wages. Corporate and employment legislation in Canada specifically provides that directors can be held personally liable for up to six months of unpaid wages.

However, the basis for finding a director personally liable has recently been extended by the Ontario Superior Court in El Ashiri v Pembroke Residence Ltd. ("El Ashiri") where the judge used the oppression remedy under corporate legislation to hold  a director (and his estate) liable for unpaid wages and other employment