What is the successor employer concept in a business sale?

Several statutes each deal with what happens to employees when a business or part of one is sold, and each sets its own trigger and effect. Which provisions apply depends on the province, on whether the workplace is a federal work, undertaking or business, and on whether the employees are unionized.

Employment standards: service carries across

Ontario’s Employment Standards Act, 2000 provides that when an employer sells a business or part of one and the purchaser employs one of the seller’s employees, the employment is deemed, for the purposes of the Act, not to have been terminated or severed, and time with the seller counts as time with the purchaser in any later calculation of length or period of employment. It does not apply if 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. British Columbia’s section 97 deems employment continuous and uninterrupted when all or part of a business is disposed of, and the Ministry’s guideline says the purchaser assumes the seller’s liabilities and obligations under the Act toward the employees.

Labour relations: a union can follow the business

Under section 69 of Ontario’s Labour Relations Act, 1995, the person to whom the business of an employer bound by a collective agreement is sold is bound by the agreement as if it had been a party, until the Labour Relations Board declares otherwise; the detail is in How do successor rights under the Ontario Labour Relations Act affect a business sale? For federal works, the Canada Labour Code says the union continues as bargaining agent and the buyer is bound by any collective agreement applicable on the date of sale.

Why buying only the assets may not settle it

These provisions turn on the sale or other disposition of a business or part of one. Ontario’s two Acts both define selling to include leasing, transferring and any other manner of disposition, and the Canada Labour Code deems leasing a business to be selling it. The British Columbia guideline adds that the purchaser may have recourse against the seller under the contract, separate from its obligations under the Act. For the liability question, see Am I liable as a successor employer after an asset purchase?