Am I responsible for public holiday pay the seller never paid out?

Public holiday pay is a statutory entitlement, and whether an unpaid amount follows the business to a buyer depends on the province. The British Columbia and Ontario sources read differently on this point.

British Columbia: the purchaser steps in

The Employment Standards Branch says that when a business is disposed of and employment continues, the purchaser assumes all of the seller’s liabilities and obligations under the Act toward the employees. It adds that if the seller does not end an employee’s employment before the sale, the purchaser is responsible for all outstanding wages, including those that fell due before the sale, while for an employee whose employment ended before the sale the seller is responsible. Where employment is continuous, statutory holiday entitlement is based on days worked and wages earned with both the previous and current employers. The purchaser may have recourse against the seller under the contract, but the Branch says that is separate from its obligations under the Act.

Ontario: continuity of service, with limits

Section 9 of the Employment Standards Act, 2000 says that where an employer sells a business or part of one and the purchaser employs an employee of the seller, the employment is deemed not to have been terminated or severed for the purposes of the Act, and employment with the seller is deemed to be employment with the purchaser for any subsequent calculation of length or period of employment. It does not apply if the purchaser hires the employee more than 13 weeks after the earlier of the employee’s last day with the seller and the day of the sale. Its text does not say who pays amounts already owing. In a worked example on vacation, the Ministry’s guide says the purchaser must pay the vacation pay accrued with the seller, if it has not yet been paid, including for the months worked since the last full vacation entitlement year.

The calculation and the clock

Under section 24 of the Act, unless another manner of calculation is prescribed, public holiday pay is based on the regular wages earned and vacation pay payable in the four work weeks before the work week in which the holiday occurred, so a holiday soon after closing looks back over weeks that may fall before it. Section 111 bars an employment standards officer from ordering wages that became due more than two years before a complaint was filed or, for wages found in an inspection, before the inspection began. Section 4 treats an employer and other persons as one employer where associated or related activities or businesses are or were carried on by or through them, even if not at the same time, and it has exceptions, so a buyer connected to the seller should ask a lawyer whether it applies.