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Don't make this mistake & pay OTHER companies severance payments...

noahkadish

Updated: Feb 6, 2024

 

Can you be held responsible for severance pay to the employees of a DIFFERENT company?

 

In this unique case discussed below, the answer was yes.

 

A dispute between a luxury hotel in Toronto and a food and beverage services provider resulted in a breach of contract, and contributed to the termination of 94 food and hospitality workers.

 

The food and beverage services provider claimed that the luxury hotel’s breach of contract resulted in the need to terminate its own (food and beverage) employees that worked inside the hotel, and that this was a reasonably foreseeable result of the hotel’s contractual breach.

 

The Court determined that the hotel’s breach of its agreement was unlawful and constituted a  failure to act in good faith and with honest performance. The Court therefore held the hotel financially responsible for the severance payments of the food and beverage company’s employees and required a payment over 2 Million dollars for severance.

 

This decision was later upheld by the Court of Appeal, dismissing the hotel’s appeal.


Key takeaway: breaking a contract & acting in bad faith can be far more expensive than might be readily apparent. Actions have consequences and in this case the consequences included an over two Million dollar severance payment.

 


breaking a contract can result in severance payments to other companies employees
Severance Pay Disputes

 

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Disclaimer: the information provided in this article is for informational purposes only, and Kadish Law, Noah Kadish, this website, its authors, and its owners do not assume any legal liability or responsibility for the accuracy, completeness or usefulness of any information contained therein. Legal advice should always be obtained by a lawyer. The information provided on this website does not in any way constitute a solicitor-client and/or lawyer-client relationship of any sort. Kadish Law is only retained as counsel to a client subsequent to a written retainer agreement being executed in person. There are time limits to all claims and any delay in proceeding may be subject to a deadline, so you should not delay in proceeding with your claim or obtaining legal advice to clarify these deadlines. Past successes are not necessarily indicative of future results.

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