Payroll transfer

In a share purchase, payroll usually continues almost invisibly because the employer — the corporation — has not actually changed. In an asset purchase it is different: the buyer is a new legal entity, and whether employment is treated as continuing or as ending and restarting depends on the wording of the purchase agreement and on employment standards rules, not on how the deal feels informally to everyone involved.

What has to be in place by closing

• A payroll account and system ready to run under the buyer’s legal entity
• Employee data — hours, deductions, benefits enrolment — migrated accurately
• Clarity on whether service is continuing for vacation, notice and benefits purposes
• Records of employment issued correctly if any employment is legally ending

Why the asset-sale distinction matters

Where the purchase agreement and applicable employment standards legislation treat employment as continuing, seniority and entitlements generally carry forward with the employee. Where it does not, the transaction can look, legally, like a termination by the seller and a new hire by the buyer, which changes what is owed and to whom, and is not something either side should assume without checking.