Is employment deemed continuous when I buy a company’s shares?

The deeming rules in employment standards laws are written for a business that changes employers. A share purchase does not do that. The corporation that employs the staff is the same before and after, and only its owners change. The answer is therefore less a rule you rely on than a result you confirm: service continues, and you inherit the corporation’s history with it.

What the deeming rules say

Ontario’s Employment Standards Act, 2000 says that if an employer sells a business or part of a business and the purchaser employs an employee of the seller, the employment is deemed not to have been terminated, and time with the seller counts as time with the purchaser. British Columbia’s guide says that if all or part of a business is disposed of, or continues under a receiver, employment is deemed continuous and uninterrupted.

Why a share purchase is different

Both provisions are triggered by a business, or part of one, being sold or disposed of, and Ontario’s also requires that the purchaser employ the seller’s employee. In a share purchase the employer disposes of nothing, because its shareholders sell their shares. Quebec’s CNESST describes the result plainly: when a company changes owner, the staff’s employment relationship is maintained as if no change had occurred, provided the new owner shows the company’s operations continue.

What you take on with the continuity

Because the same corporation remains the employer, years of service and accrued entitlements carry forward, and so does anything unpaid. CNESST says claims under the Act respecting labour standards that were not settled before the change are not cancelled by it. British Columbia’s guide says length of service and entitlements are the same after a sale as before. Review contracts, vacation balances and pending claims during diligence.

What to confirm in the deal

Ask for each employee’s start date and written terms, and ask your lawyer to check for any clause that responds to a change of ownership. Our answer on whether employees must consent to a share sale covers the related question of approval.