Is employment continuous when a business is sold in Prince Edward Island?

Under Prince Edward Island’s Employment Standards Act, a sale, lease or transfer of all or part of a business is not considered to end an employee’s employment if one of the conditions in section 1(3) is met. Section 1(3) then treats the employee as continuously employed by the same employer under that Act. The two conditions are: the employee keeps working for the new owner without interruption, or the new owner re-employs the employee within a set window. This page covers Prince Edward Island only; check the rules where you are.

What section 1(3) says

Section 1(3) applies where an employer sells, leases, transfers or otherwise disposes of all or part of a business or undertaking. In that case an employee’s employment is not considered to be terminated by it, and the employee is considered to be continuously employed by the same employer under the Act, if either paragraph (a) or paragraph (b) is met. Under paragraph (a), 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.

Under paragraph (b), the employee is re-employed by that purchaser, lessee, transferee or new interest-holder within the 13 weeks following the end of the employee’s employment with the original employer or the date of the sale, lease, transfer or other disposition, whichever occurs earlier. The section speaks of employees the buyer continues to employ or re-employs. Section 3(2) says the Act does not apply to employment governed by a collective agreement under the Labour Act, except for the provisions it lists, among them section 61.

What continuous employment affects

Several rules in the Act turn on length of continuous employment. Section 59 requires written notice of termination or layoff for an employee who has been employed continuously for 90 days or longer, with a notice period that grows with the length of continuous employment, subject to the exceptions in section 59(2); section 59(5) requires pay in lieu where that notice is not given. Section 34 requires the employer, when an employee’s employment ends, to pay by the last day of the next pay period any vacation pay the employee accrued but has not been paid. Ask a lawyer licensed in Prince Edward Island how section 1(3) applies to each employee’s service in your deal, and see does a buyer inherit employees’ years of service for the national picture.

Group termination under section 61

Section 61 sets a group termination rule. Subject to section 61(3), where 10 or more employees representing at least 25 per cent of the employees at a workplace are to be terminated or laid off within a two-month period, the employer must give written notice at least six weeks before the first termination or layoff to each affected employee, to any certified or recognized trade union for those employees, and to the Minister. Section 61(3) lists employees the rule does not apply to. A buyer that is planning staffing changes should ask its lawyer how section 61 reads on the facts; mass termination notice on a sale has its own answer.

Rules kept apart from section 1(3)

Section 1(2) allows an inspector or the Board, where the inspector or the Board considers that a business is carried on by or through more than one individual, corporation, firm, syndicate or association, or any combination of them, under common control or direction, to treat them as one employer for the purposes of the Act. Union rights on a sale are a different rule, found in section 39 of the Labour Act (headed “Sale, lease or transfer by employer”), not in this Act. Employment and Social Development Canada lists the industries and workplaces the Canada Labour Code regulates; for those, see employment when a federally regulated business is sold.