What employment warranties belong in a purchase agreement?

A warranty is a statement of fact the seller gives in the purchase agreement. If it turns out to be false, what the buyer can recover depends on the agreement’s terms. For employees, the useful statements are the ones a buyer can check against a record. The guide to representations, warranties and indemnities explains the mechanics. This page is about which employment facts to cover.

Who is employed, and since when

A schedule listing each employee, role and start date matters because the law may count the seller’s time. Ontario’s Employment Standards Act, 2000 deems an employee’s employment with the seller to be employment with the purchaser for any later calculation of length of employment, where the purchaser employs that employee, unless the purchaser hires the employee more than 13 weeks after the earlier of the employee’s last day with the seller and the day of the sale (s.9(2)). Alberta’s Employment Standards Code deems employment continuous and uninterrupted when a business is sold. A warranty that the start dates are accurate protects figures the buyer inherits.

Wages, deductions and returns

The Canada Revenue Agency says that before a payroll account is closed, all payroll source deductions must be remitted and the final payroll information returns filed. A warranty can state that deductions were remitted and returns filed up to closing. In Quebec, the CNESST says claims for amounts owed under the Act respecting labour standards that were not settled before the change are not cancelled, and that the former owner and new owner are solidarily liable for them. A warranty that no unsettled claims exist speaks directly to that.

Workers’ compensation accounts

Ontario’s WSIB says a valid purchase certificate verifies that the seller has WSIB coverage and no outstanding debts on the account, and that it may hold an asset purchaser liable for amounts the vendor owes up to the date of sale if there is no valid certificate. Other provinces’ boards run their own processes. A warranty that the account is in good standing is a statement the buyer can pair with the board’s own document, not use in place of it.

• Employee schedule with roles and start dates.
• Payroll remittances and final returns up to closing.
• No unsettled labour standards claims.
• Workers’ compensation account in good standing.