Employment standards when a business is sold in New Brunswick

New Brunswick’s employment standards statute speaks directly to share transactions. Section 89 of the Employment Standards Act, headed continuity of employment, applies where an activity, business, trade or undertaking is disposed of, transferred or sold in any manner or amalgamated, whether by agreement, will, instrument, transfer, including transfer of shares, or by operation of law. In that case the period of employment of an employee at the time of the disposition, transfer, sale or amalgamation is deemed to have been a period of employment with the disposee, transferee, purchaser or amalgamation, and continuity is deemed unbroken. This guide explains the wording and where it leads. For share purchases generally, see is employment deemed continuous when I buy a company’s shares.

The words that matter in section 89

Three features stand out. The list of triggers is long, and the phrase “in any manner” is wide. The methods named include an agreement, a will, an instrument, a transfer and operation of law, so the section is not limited to a negotiated sale. And it protects the period of employment of an employee of the activity, business, trade or undertaking at the time of the change. The section does not say that the purchaser must keep the staff. It speaks only to how their period of employment is counted.

Shares are named expressly

The Alberta, Manitoba and Newfoundland and Labrador sections do not mention shares, and New Brunswick’s does. Section 89 includes transfer of shares in its list of ways a business can be disposed of. A buyer of shares in a New Brunswick company should not assume that the lack of a new employer entity takes service history out of the picture. The text puts it within the section. Ask counsel how the deemed period of employment interacts with the facts of your particular share purchase.

How “period of employment” is defined

New Brunswick’s Employment Standards Act defines period of employment as the time from the last hiring of an employee by an employer to the termination of their employment, and includes any period of layoff or suspension of less than twelve consecutive months. That matters for gaps. Under the Employment Standards Act, a layoff or suspension of less than twelve consecutive months falls within the period of employment. Collect hiring dates and layoff records from the seller, because those records are what the definition operates on.

Where the deemed continuity shows up

Section 30 is the clearest example. Under the Employment Standards Act, except where cause for dismissal exists, and subject to subsection 30(3) and to sections 31 and 32, an employer must not terminate or lay off an employee without written notice of at least two weeks where the employee has been employed for a continuous period of six months or more but less than five years, and four weeks where the period is five years or more. Section 29 limits sections 30 and 31 to employees not covered by a collective agreement. With section 89, service with the seller can count toward those periods. Subsection 30(3) of the Employment Standards Act adds that if an employee is given notice but keeps working for one month or more beyond the end of the notice period, the notice is extinguished and a new notice must be given. Section 32 of the Employment Standards Act deals separately with terminating or laying off a larger group of employees in a four week period, above the numbers it sets out. It requires notice to be given first to the Minister, the employees affected and, where they are covered by a collective agreement, their bargaining agent, subject to the exceptions in subsection 32(3), so a buyer planning a restructuring should read it before closing.

Coverage and the provincial government’s guidance

The Government of New Brunswick’s employment standards page says the Act applies to most provincially regulated workplaces and that employers must observe its minimum standards. It notes that areas under federal jurisdiction are covered by the Canada Labour Code, and that every collective agreement must provide at least the minimums set out in the Act. A federally regulated business is a different case from the one this guide covers. The page adds that the Act does not distinguish among part-time, full-time and casual employees, and that seasonal and construction workers are entitled to the minimum rights too, so the staff list you review should include all of them. It also lists occupations the provincial Act does not cover, so check whether any of your people fall within them.

WorkSafeNB is a separate check

WorkSafeNB says that before buying any existing business, you should obtain a clearance letter from it. The letter is meant to confirm there are no outstanding premiums owed by the previous owner. That is a workers’ compensation question, apart from the Employment Standards Act, but it belongs on the same closing checklist.

• Confirm whether the transaction is a share purchase, an asset purchase or an amalgamation, and cite the matching words in section 89.
• Gather each employee’s last hiring date, and any layoff or suspension dates, from the seller.
• Ask whether any employees are under a collective agreement, since sections 30 and 31 apply only to those who are not.
• Agree in writing who answers for any amounts owing to employees at closing.
• Request a WorkSafeNB clearance letter before closing.