Successor Employer liability–The Gates Are Open

On Thursday 27 July, 2006 the Supreme Court of Canada released its decision in the TCT Logistics ("TCT") case¹. This decision substantially heightens the risk that a courtappointed receiver or trustee in bankruptcy that operates a debtor’s business, employing the debtor’s employees, will be found to be a successor employer for the purposes of employment and labour law and liable for many of the obligations of the debtor to its employees. The reasons for judgment of the 7 to 1 majority in the Supreme Court of Canada confirmed the following:

1. Provisions in court orders that attempt to insulate receivers and trustees in bankruptcy from successor employer liability by deeming such persons not to be successor employers are ineffective;