Does a union follow the business when it is sold in Prince Edward Island?

Part of the Prince Edward Island Labour Act deals with the transfer of a business and successor rights. Section 39 applies where an employer sells, leases or transfers, or has agreed to sell, lease or transfer, the business or its operations or any part of either of them. It then asks whether any of four things is true for the employees affected: a collective agreement binds the employer or the buyer, a bargaining agent has been certified, a trade union has applied to be certified, or a bargaining agent has given notice to bargain under section 21 or 23 or is entitled to give it. If the business is in an industry that the Employment and Social Development Canada (ESDC) list of federally regulated industries says the Canada Labour Code regulates, such as banks or air transportation, ask a lawyer whether the federal rule applies instead; see federally regulated employer.

What continues after the sale

If one of those four things applies, the Act says the collective agreement, certification, application, notice or entitlement to give notice continues in force and is binding on the purchaser, lessee or transferee. That is stated to hold unless and until the Labour Relations Board otherwise directs. The Act’s own wording uses “sells, leases or transfers”, so a lease or a transfer is caught as well as a sale. Ask a lawyer licensed in Prince Edward Island how those words apply to the deal in front of you.

What the board can be asked to decide

Under section 39(2), the employer, the buyer, lessee or transferee, the bargaining agent or the trade union may apply to the board to resolve a question or problem that has arisen, or may arise, because of the sale, lease or transfer with respect to that collective agreement, certification, application, notice or entitlement to give notice. Section 39(3) lists what the board may then do. It includes amending or rescinding a collective agreement to the extent the board considers necessary or appropriate, determining whether the affected employees form one or more appropriate bargaining units, declaring which trade union is the bargaining agent, and interpreting any provision of a collective agreement. The Act defines “board” as the Labour Relations Board established under section 3.

Bargaining while an application is pending

Section 39(4) says that, until the board has disposed of an application under subsection (3), the purchaser, lessee or transferee, despite any other provision of that Part, is not required to bargain with the bargaining agent for the employees to whom the application relates. The subsection speaks only to the duty to bargain while the application is pending. It does not say that the collective agreement is suspended, so read it with section 39(1) and have counsel confirm how the two fit together.

A separate rule for length of service

Length of service for minimum standards is a different question, answered by a different statute. Section 1(3) of the Employment Standards Act (the consolidation current to June 30, 2026) says that where an employer sells, leases, transfers or otherwise disposes of all or part of a business or undertaking, an employee’s employment is not considered terminated by it and the employee is considered continuously employed by the same employer under that Act, if either of two conditions is met. One is that the employee continues to be employed by the purchaser, lessee, transferee or new interest-holder without interruption on and after the date of the sale, lease, transfer or other disposition; the other is re-employment by that person within the period the subsection sets. Section 3(2) of the same Act says it does not apply to employment governed by a collective agreement under the Labour Act, except for the provisions that subsection lists, so ask a lawyer how this applies to unionized employees. For the buyer’s side of the process, see buying a business in Prince Edward Island.