Employees on leave are not to be forgotten in acquisitions

In a recent case, Brandt Tractor Ltd. v. Morasse, 2026 ONSC 992, the Ontario Divisional Court upheld a finding of the Human Rights Tribunal that the employer discriminated against an employee in its hiring process.

Now let's wind back and review the HRTO decision.

The Facts:

Ms. Morasse was an employee of Nortrax Canada Inc. ("Nortrax") for 5 years. She was on maternity leave when Brandt Tractor Ltd. ("Brandt") bought substantially all of Nortrax's assets. The asset purchase agreement was completed in a short period of time.

Following the sales transaction, Brandt hired 620 of Nortrax's 650 employees. Of the 30 that were not hired, many were on leave, including Ms. Morasse. Ms. Morasse was notified by Nortrax that her employment was terminated when she was still on leave.

The Litigation:

Ms. Morasse brought a human rights application against Brandt for discrimination based on sex and family status as they did not offer her a position following the asset transfer.

Brandt indicated that Ms. Morasse was not readily available for an interview (since she was on maternity leave), hence they did not interview her and offer a position.

The Tribunal made a decision in Ms. Brandt's favour. It found that Ms. Morasse being on maternity leave was at least a factor in Brandt's decision not to hire her and the termination of her employment by Nortrax. The prohibited ground did not need to be the only factor.

Brandt sought judicial review of the Tribunal decision before the Ontario Divisional Court. In its appeal, Brandt argued that it was never Ms. Morasse's employer and therefore was not liable for the situation.

The Division Court disagreed, finding that Brandt was directly involved in its hiring decisions, including the decision to not hire Ms. Morasse, following the sales transaction. In fact, there was evidence that Brandt had access to the HR files and participated in the process of deciding which employees of Nortrax's would be hired. This is unlike a situation where an alleged discrimination or incident of discrimination was made or found a period of time before the successor employer became involved at all. From this, we can see that the timing is particularly important.

"We did not know" is not an excuse.

Brandt also argued that while it knew Ms. Morasse was on leave, it did not know that Ms. Morasse was specifically on maternity leave and therefore could not have discriminated against her based on her protected status (remember, sex and family status are protected grounds!). The Court rejected this argument. The Court's reasons were: (1) Brandt knew or ought to have known that excluding employees on leave from an interview process would affect employees, even those on protected leaves, as they had access to the HR files and were involved in the hiring process; and (2) Brandt admitted that it chose not to interview Ms. Morasse because she was not immediately available given she was on leave. With this, the Court emphasized that the protected ground only needs to be a factor and not the sole factor when making a decision that has an adverse impact, which in this case was Ms. Morasse's termination.

A reminder: "uniform" treatment does not mean it is not discriminatory.

Brandt also argued that they had acted in a non-discriminatory manner because it applied the same hiring process to all employees on leave and was based on business considerations. The Court again disagreed. The Court indicated that identical treatment can still result in inequality especially amongst protected individuals or groups. In fact, a seemingly neutral policy or act may result in indirect discrimination, just like it did here with Ms. Morasse.

Takeaways:

• When purchasing a company, it is important to consider all the employees, even the ones on leave, when making hiring decisions. Ignorance is not bliss, and as a successor employer, the employer must make an effort to know what is going with employees when making decisions and to take steps to ensure that they are accommodated, as necessary.
• Equal treatment does not necessarily prevent discrimination. Blanket policies should be used cautiously, especially if there is the risk of them detrimentally impacting employees on leave, receiving accommodations, or belonging to a protected ground. Employers should ensure that these employees are provided with the appropriate arrangements for accommodations to prevent discrimination.
• Most importantly, a protected ground does not have to be the sole or primary reason in order to make out a case of discrimination. As long as the protected ground played any role or part in the adverse impact, discrimination can be found. Depending on whether you are the employer or the employee, you may be found liable for damages, or you may be entitled to damages.

If you have any questions regarding your hiring process, or if you are an employee who were terminated when on a leave of absence, please contact us, and we'll be happy to assist!