Does a buyer inherit employees’ years of service?

A buyer who keeps the seller’s employees does not start their clock at zero. Employment standards rules in Ontario and British Columbia carry an employee’s time with the seller across to the buyer, and Quebec’s workplace regulator describes the relationship as maintained. In practice, a long-serving employee is a long-serving employee of the new owner from the first day.

What the provincial guidance says

Ontario’s guide to the Employment Standards Act says an employee’s length of employment with the seller is attributed to the purchaser. British Columbia’s Employment Standards Branch says the employment is deemed continuous and uninterrupted by the sale, and that the purchaser is responsible for compensation for length of service counted from the date the seller hired the employee. Quebec’s CNESST says the staff’s employment relationship is maintained as if no change had occurred, though its page does not address years of service directly.

Where the years show up

Years of service drive the notice or severance owed to a terminated employee, so a buyer who ends a long-serving employee’s job soon after closing pays on the full history. The Ontario guide applies the same carry-over to vacation entitlement and to the service needed to qualify for statutory leaves. Employees the seller dismissed before the sale are different: British Columbia’s guidance leaves compensation for them with the original seller.

Limits, and what a buyer can do

Continuity assumes the employee actually moves across. The Ontario guide stops it applying where too long a gap separates the last day with the seller from the start with the buyer, and other provinces have their own rules. In a share purchase the question rarely arises, because the employer is the same corporation before and after. Buyers typically deal with the exposure in the deal itself:

• Ask for every employee’s start date during due diligence, since notice and severance exposure is built from those dates.
• Ask the seller to confirm in the agreement that the dates are accurate and that no termination claims are outstanding.
• Allocate the cost of future terminations through the price, a holdback or an indemnity, rather than discovering it later.