Continuity of service
Continuity of service means an employee’s accumulated length of employment carries forward through a change of business ownership rather than resetting. It determines notice, termination pay, severance and vacation entitlements, all of which increase with tenure.
In a share sale the question barely arises: the employer corporation has not changed, so nothing about the employment relationship is interrupted by the shares changing hands. In an asset sale the employer technically does change, which is where the confusion starts — and where employment standards legislation steps in to preserve the employee’s position.
What it affects
- Statutory notice and termination pay, which increase with years of service
- Severance pay obligations where the legislation and payroll thresholds apply
- Vacation entitlement tiers
- Common-law reasonable notice, which is assessed separately and can far exceed the statutory minimum
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentSelling a business
- 02Treadstone LawLegal commentaryESA Section 9 and Continuity of Employment on an Ontario Business Sale
- 03Treadstone LawLegal commentaryDoes an Asset Sale Terminate Employment in Ontario?
- 04Treadstone LawLegal commentaryEmployment Due Diligence Red Flags Before Buying an Ontario Business
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