Ontario Court of Appeal Clarifies Common Law Notice Liability Under the ESA Building Services Provider Provisions

In Kondaj v. Crossbridge Condominium Services Ltd., 2026 ONCA 636 (“Kondaj”), released September 10, 2026, the Court of Appeal for Ontario addressed a novel question arising under the Employment Standards Act, 2000 (“ESA”)’s building services provider provisions: when a new building services provider declines to employ an employee of a replaced provider who is engaged in providing services at the premises, who bears liability for that employee’s common law reasonable notice entitlements?

The Court held that liability rests with the new provider, not the replaced provider.

Legislative Framework: Does This Case Apply to You?

The ESA contains specialized provisions that apply when one building services provider replaces another. In relevant part, s. 75 provides that the new provider must comply with Part XV of the ESA with respect to every employee of the replaced provider who is engaged in providing services at the premises and whom the new provider does not employ, as if the new provider had terminated and severed that employee’s employment.

In certain circumstances, the statute deems the new provider to be the employer of affected employees and assigns termination-related obligations accordingly. As Kondaj confirms, those obligations may extend beyond ESA minimum entitlements and include common law reasonable notice damages.

If you operate in the property management, cleaning, security, food services, or certain parking-services sectors, this decision may apply to you.

Background Facts

Gazmend Kondaj worked as a building manager at the SoHo Hotel & Residences while employed by Crossbridge Condominium Services Ltd. (“Crossbridge”). When the property management contract was retendered, Duka Property Management Inc. (“Duka”) became the new provider.

Upon taking over management of the property, Duka elected not to continue Mr. Kondaj’s employment. Crossbridge likewise did not place him at another property.

Following that decision, Duka paid Mr. Kondaj his statutory termination entitlements under the ESA, including termination pay and benefits continuation. However, neither Duka nor Crossbridge provided Mr. Kondaj with common law reasonable notice. When Mr. Kondaj commenced a wrongful dismissal action against both companies, each took the position that the other bore responsibility for any common law notice obligations. 

The matter proceeded by way of summary judgment. The motion judge found Duka liable for approximately ten months’ common law reasonable notice and corresponding benefits damages. Duka appealed.

The Motion Judge’s Decision

Before the motion judge, Duka and Crossbridge advanced competing interpretations of the ESA’s building service provider provisions. Duka argued that s. 75 required a new provider to provide only ESA minimum termination and severance entitlements. Crossbridge argued that s. 75 assigned responsibility for all of Part XV of the ESA, including the underlying termination itself and the legal consequences flowing from that termination. 

The motion judge accepted Crossbridge’s interpretation and found Duka liable for Mr. Kondaj’s common law reasonable notice damages.

The Court of Appeal’s Decision

On appeal, the Court dismissed the appeal and concluded that the motion judge correctly interpreted the ESA. 

Applying the modern approach to statutory interpretation, the Court found that the motion judge’s interpretation was consistent with (a) the Legislature’s intent, (b) the scheme of the ESA; and (c) the wording of ss. 56 and 75 of the ESA.

(a) Legislative Intent

Part XIX of the ESA is employee-protection legislation designed to promote continuity of employment in an industry where service contracts frequently change hands.

With this context, the Court held that assigning common law liability to the replaced provider would create an incentive for new providers to decline to employ employees of a replaced provider who were engaged in providing services at the premises, undermining the legislative objective of promoting employment continuity when service contracts change hands. Specifically, termination of the old provider’s employees would minimize the new provider’s costs as the new provider would not have to pay common law entitlements. At the same time, it would maximize the costs of the old provider, the new provider’s “wounded” competitor reeling from the loss of a service contract, as they would have to pay the common law entitlements.

Further, such an interpretation would incentivize new providers to decline to retain incumbent employees in order to avoid future common law notice exposure, contrary to the Legislature's objective of promoting employment continuity.

In brief, the Court concluded that imposing liability on the new provider was more consistent with that objective and with the legislative history of these provisions.

(b) The Scheme of the ESA

The Court confirmed that statutory and common law termination entitlements do not exist as separate and independent regimes. Rather, those entitlements are intertwined. Both arise from the same act of termination and address the obligations flowing from that event. Further, the Court confirmed that common law rights may be shaped by statutory provisions even where the legislation does not expressly refer to common law notice. The ESA establishes minimum standards, while the common law may provide additional entitlements arising from the same termination.

The Court also emphasized that s. 75(3) deems the new provider to have been the employee’s employer from the commencement of employment for termination purposes. The Court noted that a similar statutory deeming mechanism appears elsewhere in the ESA in the context of building service provider transitions. Specifically, where a new provider elects to retain an employee from a replaced provider, s. 10 treats the employee’s service with the replaced provider as continuous and deems that prior service to have been employment with the new provider for the purpose of subsequently calculating employment-related entitlements. Should the new provider later terminate the employee’s employment, both ESA and common law obligations would be determined by reference to the employee’s entire period of service, including service with the replaced provider.

In the Court’s view, “[i]nterpreting s. 75 of the Act to hold a successor provider responsible for common law notice entitlements harmonizes the consequences under the Act when an employee is both hired (under s. 10) and not hired (under s. 75) by a successor provider.” In either scenario, the Court’s decision ensures that responsibility for termination-related obligations arising throughout the employee’s entire period of service rests with a single employer: the new provider.

Importantly, the Court’s reasoning under this heading was also informed by s. 77 of the ESA, which permits prospective new providers to obtain information regarding affected employees before assuming a contract. The Court noted that this information includes employee names, status, length of service, terms and conditions of employment, allowing a prospective new provider to assess potential termination-related liabilities and make informed decisions regarding contract bidding and employee retention. In the Court’s view, this further supported the motion judge’s interpretation of the overall scheme of the ESA.

(c) The Wording

Turning to the statutory language, the Court concluded that ss. 56 and 75 must be read together. In doing so, the Court identified where the new provider’s liability for common law reasonable notice arises.

For context, s. 56 forms part of Part XV of the ESA and sets out what constitutes a termination of employment. Before determining what termination-related obligations arise, Part XV first identifies the circumstances in which an employee’s employment is considered to have been terminated.

Section 75, in turn, requires the new provider to comply with Part XV “as if” it had terminated the employee’s employment and deems the new provider to have been the employee’s employer for that purpose.

As described by the Court:

[70]      First, while s. 56 of the Act describes the ways in which an employee can be terminated “for purposes of section 54” of the Act, the definitions of termination in s. 56 also apply at common law, “because [s. 56] applies generally in all cases to require the employer to give notice whenever an employee is terminated”: Elsegood at para 8. Likewise, the statute deeming a new provider to have been the employee’s employer under s. 75(3) “for the purposes of subsection (2)” does not preclude a similar deeming for the purposes of the common law.

[71]      Second, by incorporating s. 56, s. 75(2) imposes common law reasonable notice provisions on new providers. […]

In practical terms, the domino effect flowing from these provisions is as follows:

1. The new provider’s decision not to employ the employee triggers s. 75.
2. Section 75 requires the new provider to comply with Part XV of the ESA as if it had terminated the employee’s employment.
3. Part XV includes, among other sections,

(a)   s. 54, which prohibits termination without notice (ss. 57 and 58) or pay in lieu of notice (s. 61); and

(b)   s. 56, which defines what constitutes a termination of employment.

 4. As confirmed in Elsegood, a termination under s. 56 is capable of giving rise to common law wrongful dismissal damages.

Accordingly, once s. 75 attributes the termination to the new provider, the common law consequences flowing from that termination likewise rest with the new provider.

Viewed this way, the Court’s conclusion followed naturally from the statutory language. Section 75 did more than assign responsibility for ESA minimum termination entitlements. It assigned the ESA termination itself to the new provider. Once that occurred, both the statutory and common law consequences of that termination followed.

Key Takeaways

This decision has significant implications for property management companies, cleaning contractors, security contractors, and other building services providers operating in Ontario. In particular, it highlights the importance of conducting employment-related due diligence and carefully planning service-provider transitions before bidding on and assuming a contract.

• New providers now face potential common law notice exposure. Declining to retain an employee of a replaced provider who is engaged in providing services at the premises may result in liability for both ESA minimum entitlements and common law reasonable notice damages. However, new providers should be mindful of the exemptions in s. 75(4), which exclude certain employees from the operation of s. 75(2), including employees retained by the replaced provider and any prescribed employees.
• Employment due diligence should form part of the bidding and transition process. Before assuming a contract, prospective new providers should assess the workforce servicing the premises, including employee roles, compensation, length of service, and employment terms. The employee information available under s. 77 of the ESA may be critical in evaluating potential termination-related liabilities before deciding whether to retain incumbent employees.
• Transition planning should begin well before the handover date. Service-provider transitions should not be treated as purely operational exercises. Workforce planning, retention decisions, and potential termination liabilities should all be considered before a contract changes hands. As Kondaj demonstrates, employment-related liabilities may represent a significant component of the overall cost of assuming a new contract.

• Contractual risk allocation remains important. While Kondaj confirms that common law reasonable notice liability rests with the new provider, it does not eliminate other potential claims or liabilities that may arise from a service-provider transition. Further, it does not affect any contractual rights or obligations that may exist between the new provider, the replaced provider, and the building owner, nor does it preclude the parties from negotiating new contractual protections in connection with a transition. Parties should therefore consider whether indemnities, representations, warranties, or other risk-allocation mechanisms are appropriate when negotiating new agreements or making transition arrangements. Properly drafted contractual protections may help allocate or mitigate liabilities arising from the transition.

If you operate in the building services sector and require legal advice regarding a service-provider transition, employment claim, or contractual dispute, whether as a new provider or a replaced provider, please contact Matthew R. Vella and Caroline DeBruin, who successfully represented Crossbridge Condominium Services Ltd. at both the motion and appellate levels in this landmark decision.