Does a buyer in Quebec become liable for the seller’s unpaid wages?

A buyer of assets often assumes the seller’s debts stay with the seller. For wages in Quebec, that assumption is only half right. If you buy the business or part of it, you can end up answering to the seller’s former employees for pay that was owed before you arrived. The national picture is in who is responsible for unpaid wages after a sale; this page covers what is different in Quebec.

What the statute says

Section 96 of the Act respecting labour standards provides that the alienation or concession of the whole or a part of an undertaking does not invalidate a civil claim under the Act that was unpaid at that time, and that the former employer and the new employer are bound solidarily in respect of that claim. The CNESST, Quebec’s labour standards commission, repeats the point on its page about the sale, merger or purchase of a company.

What solidary liability means in practice

Under the Civil Code of Québec, each solidary debtor can be compelled to perform the whole obligation, and the creditor may ask any one of them for payment (arts. 1523 and 1528). The employee can therefore ask you for the full amount without chasing the seller first. Your purchase agreement does not change that, because a contract affects only its parties unless the law provides otherwise (art. 1440). It matters between you and the seller, where the Code shares the cost equally unless their interests in the debt are unequal, in which case it follows each one’s interest (art. 1537).

Where the limits are

The CNESST says the employment relationship continues as though nothing had changed, provided the new owner demonstrates the continuity of the company’s operation, and that the former owner is not liable for claims arising from events after the sale. Section 96 covers claims under the Act and its regulations, so amounts promised only in an individual contract need their own analysis. In a share purchase the employer does not change, and the corporation you now own simply keeps what it owed.

How buyers deal with it

• Ask for payroll records, vacation balances and any open CNESST complaints before you sign.
• Have the seller pay outstanding amounts at or before closing, or hold money back against them.
• Put an indemnity in the agreement that covers wage claims and says who reimburses whom.