In my previous blog post titled “Building Services Providers as Employers”1, I discussed the special rules that apply to building services providers under the Employment Standards Act, 2000 (the “ESA”)2. These rules apply to building services such as food services, security, cleaning, parking and property management, where contracts frequently change hands.

In most industries, when a new company takes over a contract, it has no obligation to hire the outgoing provider’s employees or assume liability for their severance. The employment relationship remains with the original employer.

The building services sector operates differently. When a new provider takes over a contract, the ESA imposes obligations on the incoming company in respect of the outgoing workforce. These rules are intended to balance the interests of employees and employers in a sector where contract turnover is common, including by addressing the disruption that can arise when service contracts are lost and staffing levels no longer match available work.

The statutory framework

Under the ESA, when a new provider (“Newco”) replaces a previous provider (“Oldco”), there are two possible outcomes: 

  1. If Newco hires Oldco’s employees, their period of service is treated as continuous. In practical terms, the employee’s length of service carries forward.
  2. If Newco does not hire an employee, the ESA deems Newco to have dismissed that employee. As a result, Newco becomes responsible for statutory termination and severance pay.

This framework clearly establishes statutory liability. What was less clear until recently was whether that liability extended further.

The open question of common law notice

In my previous blog post, I wrote the following:

 “Newco will also likely be responsible for providing the employee with reasonable notice of termination, or pay in lieu thereof, pursuant to common law.”

At the time, this point had not been directly confirmed by a court. The ESA clearly imposed statutory termination and severance obligations on Newco, but it remained uncertain whether an incoming provider would also be responsible for common law reasonable notice, which can be significantly more substantial.

That uncertainty has now been resolved.

The Kondaj decision

In Kondaj v. Crossbridge Condominium Services Ltd.3, the Ontario Superior Court of Justice confirmed that Newco is responsible not only for statutory termination and severance pay, but also for common law reasonable notice when it chooses not to hire an employee during a building services contract transition.

The case involved a building manager, Gazmend Kondaj, who worked for Crossbridge Condominium Services Ltd. (“Crossbridge”). When Crossbridge lost its contract, Duka Property Management Inc. (“Duka”) took over the site but decided not to employ him.

Duka paid Mr. Kondaj three weeks of statutory termination pay under the ESA, but neither Duka nor Crossbridge paid him any compensation in respect of common law notice.

Mr. Kondaj then brought a claim for common law notice of termination. He named both Crossbridge and Duka as defendants, with each arguing that the other was responsible for paying him his common law entitlements.

The Court held that Duka, the new service provider, was responsible for that common law entitlement.

Practical impact of the decision

This finding has important consequences for building services providers. 

It confirms that incoming providers cannot assume their exposure is limited to ESA minimum entitlements when they decide not to retain existing staff. Instead, they may also be responsible for reasonable notice at common law, which is often significantly greater than statutory termination and severance pay.

Conclusion

In my earlier blog, I identified a potential risk that had not yet been confirmed by the courts. The Kondaj decision has now confirmed that risk.

When an incoming building services provider chooses not to hire an existing employee, it may be responsible not only for statutory termination and severance pay under the ESA, but also for common law reasonable notice.

This significantly increases the importance of careful planning during contract transitions, including a clear understanding of the workforce being assumed or left behind.

If your organization is involved in a building services contract transition, or if you are an employee affected by a change in service provider, it is important to understand how these rules may apply to your situation. Please contact us to discuss your specific circumstances and how we can assist.

 Endnotes 

  1. Minkin, Alex. “Building Services Providers as Employers.” Rudner Law (blog). March 4, 2024.https://www.rudnerlaw.ca/building-services-providers-as-employers/.
  2. Ontario, Employment Standards Act, 2000, SO 2000, c 41, current consolidation (January 1, 2026), https://www.ontario.ca/laws/statute/00e41.
  3. Kondaj v. Crossbridge Condominium Services Ltd., 2025 ONSC 3905 (CanLII), <https://canlii.ca/t/kdnts>

 

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