Bombardier’s victory in the Abbott case is good news for all Ontario employers considering outsourcing, and the law is now clearer about the choices for employees.

In recent years, many employers have “gotten out of the business” of performing specific core functions, with non-essential work outsourced to specialized firms.

In a recent Ontario case, Abbott v. Bombardier, the Court clarified that the transfer of employees and their work to another company does not necessarily constitute a dismissal by the original employer.

John Abbott was one of a group of employees who worked for Bombardier Aerospace’s Information Technology Services (ITS) group, providing technical support for Bombardier’s aircraft business. When Bombardier outsourced those jobs, Abbott and 44 others sued Bombardier for termination and severance pay under Ontario’s Employment Standards Act (ESA).

In July, 2003, Bombardier signed a contract with CGI Inc. to transfer the ITS group to CGI. The contract required CGI to make offers of full-time work to Bombardier ITS employees, including all of the plaintiffs. Under the agreement, the jobs offered did not need to be identical, but the terms and conditions of employment had to be equivalent to those enjoyed with Bombardier.

In conjunction with the outsourcing, Bombardier gave the plaintiffs approximately eight weeks working notice that their employment with Bombardier would terminate on Sept. 7, 2003.  The plaintiffs were advised at the same time that they would receive offers of employment from CGI on equivalent terms. 

About a month later, CGI provided the plaintiffs written employment offers. All of the plaintiffs accepted these offers, and started to work as CGI employees on Sept. 8, 2003, the day after their employment with Bombardier ended.

Despite continuing to work at CGI, the plaintiffs proceeded with their lawsuit for termination and severance pay against Bombardier. In response, Bombardier relied on the Ontario ESA’s sale of business rules. In particular, section 9 of the ESA provides that if all or part of a business is sold and the purchaser employs an employee of the selling organization, the employment is deemed not to have been terminated or severed

Bombardier successfully argued that the contract with CGI involved a “business” being sold. The reason, said the Court, was that the outsourcing of the work involved the transfer of a specific bundle of tasks and functions performed by an identifiable group of employees, and the transfer of significant assets.

A further significant issue was whether or not CGI “employed” the plaintiffs within the meaning of the ESA given that some terms of their new employment were arguably different from those offered by Bombardier. The Act is silent on the issue of whether the terms of employment with the purchaser need to be identical in order to avoid a severance liability being triggered.

The Court concluded that if an employee accepts employment with the purchaser, it is irrelevant that the terms and conditions are different from those that existed with the vendor. There is no wording in the Act obliging the new terms to be identical, and every employee has the option of not accepting employment with the purchaser. So, if the employee wishes, they may treating the vendor’s sale of the business as termination and claim the resulting benefits.

Bombardier’s victory in the Abbott case is good news for all Ontario employers considering outsourcing, and the law is now clearer about the choices for employees. Not only did the Court accept the expanded notion of what constitutes a “business” under the ESA, the suggestion that the new position must be identical was rejected. For the future, this should help employees recognize that they will not have a claim against their old employer after they accept a comparable position with the transferee.

George Waggott is a lawyer with Lang Michener LLP. His practice includes advising employers on all aspects of employment and labour law. He also acts for executives on employment law matters. Reach him at 416-307-4221 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .