Common-law notice (reasonable notice)

In a business sale, common-law notice is the exposure that can sit above the statutory minimums. A buyer who inherits staff, or a seller whose employees are not kept on, may face a claim for more than the statute gives, so the question is worth raising early in due diligence.

What the statutes say

Ontario’s Ministry of Labour guide describes the Employment Standards Act rules on termination and severance as minimum requirements, and says some employees may have common-law rights greater than them. The guide adds that an employee cannot both sue for wrongful dismissal and file a claim with the ministry for termination pay or severance pay for the same termination; the employee must choose one. The Act itself says that, subject to section 97, no civil remedy of an employee against the employer is affected by it (s. 8(1)). For federally regulated employers, the Canada Labour Code says no civil remedy is suspended or affected by its unjust dismissal provisions (s. 246(1)). Other provinces and territories have their own statutes.

What to check or ask

• Whether each employee has a written contract and what its termination clause says
• How long each employee has worked for the seller, and how your deal treats that service
• Whether the real exposure is the statutory minimum or a larger court-assessed amount, which is a question for an employment lawyer in that province

The statutes cited here set no formula for common-law notice. For the service question, read does an employee’s reasonable notice include years of service with the seller, and compare statutory minimum notice.