The Ontario Labour Relations Board (OLRB) has ruled that a rental property’s new owner owed termination pay to a long-time superintendent after treating his rent-free accommodation as wages under the Employment Standards Act.
The ruling, issued by Vice-Chair Maureen Doyle, underscores that superintendents are considered employees for the purposes of the Act and that a building sale can amount to a “sale of business” that makes the purchaser a successor employer.
Sale of building
The case involved 13862615 Canada Inc. (the applicant) and J.C. (the responding individual party), as well as the Director of Employment Standards (DES). The applicant had purchased an apartment building located at 43 Ormond St. S in Thorold, Ont., where J.C. had worked as a superintendent before and after the building changed hands.
Prior to the sale, J.C. had been allowed to live in one of the apartments rent-free in exchange for performing duties such as cleaning, taking out garbage, cutting grass, shovelling sidewalks, and responding to emergencies.
Documents before the Board showed that the applicant executed an Agreement of Purchase and Sale for the 46-unit building on August 22, 2021, with the closing date set for December 15, 2021. According to the Board, the seller provided the purchaser with tenant information, leases, and acknowledgements, including one from J.C. confirming that he occupied a unit rent-free as the building superintendent.
Even after the sale, J.C. continued to perform his superintendent duties. On May 2, 2022, however, the applicant sent J.C. a letter stating that his position was “terminated effective immediately” and that if he chose to remain in the apartment, he would now have to pay rent.
Superintendent an employee: ESO
An Employment Standards Officer (ESO) investigated the situation and determined that J.C. was an employee under the Act, and that his rent-free unit amounted to wages. The ESO also found that section 9(1) of the Act applied, making the applicant liable for termination pay reflecting J.C.’s entire period of employment — six years and one month — since the Act deems that an employee’s tenure carries over in a “sale of business” scenario. The ESO issued an order requiring the applicant to pay termination pay to J.C.
In seeking a review of the ESO’s order, the applicant argued that J.C.’s status should be governed by the Residential Tenancies Act (RTA), not by employment standards legislation.
The applicant also contended it had not purchased a business, only the physical structure of the building, and that it did not employ J.C. upon acquisition. Instead, the applicant said it simply “inherited” him as a tenant. The applicant maintained that the previous owner employed J.C. and that, at common law, a sale of the property alone would not impose any employment obligations on the purchaser.
Room and board
The Director of Employment Standards, on the other hand, submitted that superintendents receiving room and board are considered employees under the Act. The DES argued that nothing in the RTA removes or overrides the employment relationship, and that J.C. was performing work in exchange for wages, defined under the Act to include room and board.
The DES also pointed to section 9 of the Act, which extends the length of employment from the seller to the purchaser in a sale of business. According to the DES, this meant that from an employment standards perspective, J.C. never experienced a break in employment when the building changed hands.
In its analysis, the Board confirmed that both the RTA and the Act can apply to the same individual in different respects. While the RTA governs the landlord-tenant relationship, it does not address the terms of employment for superintendents. The OLRB found that it is entirely possible for a superintendent to be both a tenant and an employee. The fact that J.C. lived in the building rent-free and performed ongoing duties for the benefit of the owner brought his work clearly within the Act’s definition of employment.
The Board referenced section 1 of the Act, noting that “employees” include individuals who perform work for wages and that “wages” can include allowances for room or board. It further noted that Ontario Regulation 285/01 contemplates that superintendents are employees, as it provides exemptions for them only from certain provisions of the Act, not from the Act entirely.
Successor employer
Addressing the issue of successor employer status, the Board turned to section 9 of the Act, which states that if an employer sells a business and the purchaser employs the seller’s employee, the employment is deemed to continue for the purposes of the Act. The applicant argued that no employment relationship existed after the sale since it never made J.C. a formal offer.
The Board rejected this contention, focusing on the fact that J.C. continued working as a superintendent after the sale and that the applicant knew of this arrangement. The Board found that the applicant was aware of J.C.’s duties, aware that he occupied a unit rent-free, and did nothing to terminate or alter this arrangement until the May 2, 2022 letter. By then, J.C. had already worked for months under the applicant’s ownership.
The OLRB also addressed the applicant’s reliance on common law authorities, such as Addison v. Loeb Ltd., which establish that employment ends under common law when a business is sold. The Board noted that the Act must be given a broad and liberal interpretation to protect employees’ statutory entitlements. It cited cases such as Abbot v. Bombardier Inc. and Revin v. Lamantia Garcia Products Ltd., which reject the idea that a “going concern” test is necessary to determine whether a sale of business occurred. According to the Board, the sale of the building, the transfer of tenant information, and the applicant’s continuation of the rental operation all pointed to a “sale of business” for the purposes of the Act.
Under this view, it did not matter that no formal re-hiring process occurred. By continuing the rental business and benefiting from J.C.’s superintendent work, the applicant became J.C.’s employer by operation of law.
The Board found that J.C. was an employee entitled to termination pay and that the applicant, as a successor employer, must consider J.C.’s full length of service. The Board dismissed the applicant’s arguments and upheld the ESO’s order, directing that the termination pay be released to J.C. as determined.
Overall, the OLRB’s decision confirms that superintendents who work in exchange for free accommodation are employees covered by the Act. The ruling clarifies that when a building is sold and the purchaser continues to benefit from the existing labour arrangement, the purchaser inherits the employment relationship. The Board concluded that the applicant owed J.C. termination pay reflecting his entire tenure, including the years he worked for the previous owner.
For more information, see 13862615 Canada Inc. v John Cicci, 2024 CanLII 122429 (ON LRB).
