How to buy a cleaning business in Canada

For a buyer of a cleaning business, several of the type-specific legal questions sit around the client contracts and the crew who work them. Some of those rules are provincial and apply only in some places. This guide covers three points that are specific to cleaning: Ontario’s successor rule for building services, Quebec’s decrees for building service employees, and the chemical-safety duties that come with hazardous cleaning products. It leaves aside general contract and workers’ compensation questions. For the overall process, start with how to buy a business in Canada, and see cleaning businesses for sale for what is listed.

Ontario: a changed contract can be treated as a sale

In Ontario, section 69.1 of the Labour Relations Act, 1995 applies to services provided directly or indirectly by or to a building owner or manager that relate to servicing the premises. The section names building cleaning services. Section 69.1(2) excludes construction, maintenance other than maintenance related to cleaning the premises, and the production of goods other than goods related to food services at the premises for consumption there, so read it against the actual work. Under s.69.1(3), a sale of a business is deemed to have occurred, for the purposes of section 69, if employees perform services at premises that are their principal place of work, their employer ceases in whole or in part to provide the services there, and substantially similar services are subsequently provided at the premises under the direction of another employer.

What section 69 adds for a buyer

Section 69 is the Act’s general rule on the sale of a business. Section 69(2) says that when an employer bound by a collective agreement sells the business, the person to whom it is sold is, until the Ontario Labour Relations Board otherwise declares, bound by the agreement. So if you are buying a cleaning company with Ontario sites, ask whether any crew is represented by a union and whether a collective agreement exists. Because s.69.1 can treat a change of cleaner at a site as a sale, ask a labour lawyer whether it reaches each contract you are counting on, in both directions: contracts you are buying and contracts you may later win.

Quebec: conditions set by decree

Quebec handles building cleaning differently. Separate decrees cover building service employees in the Montréal region and in the Québec region. Each applies to maintenance work performed for others within the municipalities listed in its Schedule I. The Montréal decree defines maintenance work as any work connected with washing, cleaning and sweeping, or other work of the same type, performed inside or outside of a public building. The Québec region decree defines it as any work involving cleaning inside or outside of a public building. Both list exclusions, such as maintenance work in hotel or motel rooms, certain self-employed workers, and maintenance by employees of some public-sector and non-profit building owners, so whether a decree reaches a given business depends on its premises, its clients and who does the work. Ask the seller which decree, if any, the company has been applying.

A sale does not clear decree obligations

The Act respecting collective agreement decrees speaks to a sale directly. Section 14.1 says the alienation or concession of the whole or part of an enterprise, otherwise than by sale under judicial authority, or a change to its juridical structure by amalgamation, division or otherwise, does not extinguish any debt arising from the Act, a regulation or a decree that was incurred before the change, and that the former employer and the successor are solidarily liable for such a debt. Section 14.2 says the alienation or concession of an enterprise, or a change to its juridical structure, in no way affects the continuity of the application of the conditions of employment established in the decree. If the target has Quebec crews, ask for proof of decree compliance and any amounts outstanding, and ask counsel how debts that arose before closing should be handled in the purchase agreement.

Hazardous cleaning chemicals bring a WHMIS program

To the extent a cleaner’s products are hazardous products, the Canadian Centre for Occupational Health and Safety (CCOHS) says all hazardous products used in the workplace are covered by the WHMIS regulations, and a WHMIS program, including education and training, must be in place. It adds that products in the workplace that do not fall under the WHMIS regulations may still have hazards, and that employers must train workers on how to work safely with those products too. Ask to see the program, the crew’s training records and the safety data sheets for the products the company actually uses. If the business also sells hazardous products to clients for use in their workplaces, section 14.3 of the Hazardous Products Act, subject to the exclusions in section 12, requires every supplier who sells or imports a hazardous product intended for use, handling or storage in a work place in Canada to prepare and maintain the documents that section lists, including copies of the label and safety data sheet and records of where it obtained and sold the product, and keep them for six years after the end of the year to which they relate, or any other prescribed period.

Questions to take to the seller and to counsel

• Which sites are in Ontario, and at which of them do employees have that site as their principal place of work? Have counsel read s.69.1 against each contract.
• Is any crew represented by a union, and would you be bound by a collective agreement on closing?
• Does any work fall in the Montréal or Québec region, and has anyone confirmed in writing whether a decree applies?
• Where are the WHMIS program, the crew’s training records and the safety data sheet file?
• Does the company sell or import hazardous products for clients’ workplaces, and are its supplier records on file?