Does a business sale trigger mass termination notice requirements?

Mass termination notice is triggered by employees losing their jobs in numbers, not by a change of owner. What matters is what happens to each employee at closing: moved across to the buyer with their service intact, or left behind and out of work. The answer also depends on the province where they work.

How Ontario treats a sale

Under Ontario’s Employment Standards Act, 2000, if an employer sells a business or part of one and the purchaser employs a seller’s employee, that employment is deemed not to have been terminated, and service with the seller counts as service with the purchaser. The mass termination rules are separate. They apply when an employer ends the employment of a set number of employees at one establishment within a short window, and the Ontario government’s guide says notice goes to the Director of Employment Standards on Form 1 and is not effective until the Director receives it.

Employees the buyer does not take on

The deeming rule covers employees the purchaser employs. It does not protect anyone the buyer chooses not to hire. In an asset sale where the buyer keeps only part of the team, the seller can be left with terminations that may count toward the threshold. The Ontario guide also treats the home of an employee who works only from home as part of the employer’s establishment, so include fully remote staff in the head count.

British Columbia and Quebec

British Columbia applies section 97 of its Employment Standards Act, under which employment is deemed continuous and uninterrupted when all or part of a business is disposed of. The Employment Standards Branch guide adds that employees who choose not to work for the purchaser, when their conditions have not substantially changed, are deemed to have quit, and it points to the group termination provisions. In Quebec, the CNESST says the employer must report a sale to it and that unsettled labour standards claims are not cancelled by the sale.

What to settle before closing

• Decide which employees the buyer will offer jobs to, and put it in the purchase agreement.
• Count the employees who will not transfer, site by site, before you fix a closing date.
• Check your province’s notice and filing steps early. In Ontario, notice is not effective until Form 1 reaches the Director.