Do I have to keep the seller’s employees?

The honest answer is that the deal structure decides this before either party even discusses staffing. Buyers who assume they can simply keep the good employees and let the seller deal with the rest are often surprised at how differently an asset sale and a share sale treat that choice.

Share sale: the employer never changes

In a share sale, you are buying the shares of the corporation, not its individual assets — the corporation itself remains the employer throughout. Every employment contract, every accrued entitlement and every workplace policy simply continues, because nothing about the legal employer changed. You did not choose to keep the employees; you bought the entity that already employed them, obligations included.

Asset sale: you are building a workforce, not inheriting one

An asset purchase does not transfer employment contracts automatically. The seller’s employees are employed by the seller, and unless the purchase agreement and the buyer’s own offers say otherwise, those employment relationships end when the seller stops operating the business — the buyer then decides who, if anyone, to hire into a fresh relationship. Nothing compels a buyer to make an offer to any particular person.

Freedom to choose is not freedom from consequence

Declining to hire the seller’s staff can leave the seller facing termination obligations it did not budget for, and it can leave the buyer without the operational knowledge the business depends on. Most provinces also have continuity-of-service rules that treat a buyer who does hire the seller’s employees as picking up their prior length of service for certain purposes, even though the employment relationship is technically new.

Put the staffing plan in writing before you sign

A purchase agreement should say, in plain terms, which employees the buyer intends to offer employment to, on what terms, and who bears the cost if the seller has to terminate anyone the buyer does not want. Handshake assumptions about staffing are one of the most common sources of post-closing disputes on small deals.