Can I become a related employer just by buying part of a business?

Related employer and successor employer are different ideas that buyers tend to blur. A successor takes on obligations because it acquired a business or part of one. A related employer can be treated as one employer with another because the two run connected businesses. Buying a division can raise the first question without ever raising the second.

What makes employers related

Ontario’s Labour Relations Act and British Columbia’s Labour Relations Code both let the labour board treat associated or related businesses as one employer when they are carried on through more than one corporation, individual or firm under common control or direction. Ontario’s version applies whether or not the businesses run at the same time. The test is about control, not about how a business was acquired, and whether an arrangement amounts to common control or direction is for the board to decide on the facts.

What a partial purchase does trigger

Sale-of-business provisions reach partial purchases. Ontario’s Act defines a business to include a part of it, and British Columbia’s Code binds a purchaser when a business or a part of it is sold, leased, transferred or otherwise disposed of. On employment standards, British Columbia’s branch reads its sale-of-business section to cover all or part of a business, and Ontario’s guide gives the example of a dairy that sells its ice cream division. The buyer who takes the employees must recognize their past service.

Where the two ideas can meet

They meet when buyer and seller stay connected after closing. A seller that keeps control of, or directs, the business it sold looks different from one that walks away. If the seller or its owners will keep any role in the buyer, or in how the acquired part is run, raise it with a lawyer before closing, because common control or direction is the fact a board would examine.