What employment standards apply to staff when a business is sold in Yukon?

When a business is sold in Yukon, the Employment Standards Act deals with staff through one section. Section 26 says “transfer” of a business includes a sale, lease or other disposition and a merger with another business. Where an employer employs an employee in connection with a business and transfers the business to another employer, the employee’s employment with the two employers before and after the transfer is deemed continuous with the employer to whom the business is transferred. That deeming applies to some Parts of the Act, not all of them. This guide covers Yukon only. It sets out where continuity applies, what that means for vacation and termination notice, who the Act does not cover, and what it leaves unsaid.

Who the Act covers

Under section 2, the Act applies to every employee employed in Yukon and to the employer of every such employee. It does not apply to the Government of Yukon or its employees. The Government of Yukon says the Act and Regulation set the minimum standards for employment in Yukon, and that the Act does not apply to territorial, First Nations and federal governments, or to employees employed by sectors under federal jurisdiction, such as banks and airlines. It also lists employees covered by a collective agreement, unless the agreement does not meet the minimum standards. If the business you are selling is federally regulated, different law governs its staff. The federal Canada Labour Code, for example, provides in section 44(2)(c) that, where an employer sells a business, the person to whom it is sold is bound by any collective agreement that is, on the date of the sale, applicable to the employees employed in the business.

Where section 26 applies

Section 26(2) itself applies to the annual vacations Part. The Act then extends section 26 to other Parts by its own words: section 28(3) for general holidays, section 40(2) for maternity and parental leave, section 49(2) for termination of employment, and section 61(2) for the special leave Part. Section 40(1) separately says an employee’s absence on leave under that Part is considered continuous service for the purposes of the Act. Read the Parts by name: continuity from the seller’s start date carries into the buyer’s hands for those subjects. For any other subject, such as wages or equal pay, this guide says nothing, so ask a Yukon employment lawyer.

Vacation and the year of employment

The Act defines a “year of employment” as the continuous employment of an employee by one employer for a period of 12 consecutive months beginning with the date employment began or any later anniversary date. Because section 26(2) deems employment with the seller and the buyer to be continuous with the buyer, a sale does not by itself restart that count for the vacation provisions. The Government of Yukon says an employer must start paying vacation pay after the employee has been continuously employed for 14 days. A buyer should ask the seller for each employee’s start date and vacation balance.

Termination notice

Under section 50(1), no employer may terminate the employment of an employee who has been employed for six consecutive months or more unless the employer gives written notice that grows with length of employment, starting at one week for an employee employed under one year and two weeks for one year or more but less than three years. Because section 49(2) applies section 26 to this Part, a buyer counting an employee’s length of service should start from the employee’s original start date. Section 49(1) lists cases the Part does not apply to, including the construction industry, an employee discharged for just cause and an employee on temporary layoff. Section 49(3) removes sections 50 to 57 for an employee represented by a trade union for the purpose of bargaining collectively.

What the Act does not say

The Act, as read for this page, does not require a buyer to hire any of the seller’s employees. It deals with how employment is counted if the employee stays. If the buyer does not take the staff, ask who terminates them and who gives the written notice under section 50. Also compare the same topic in the Northwest Territories, which rests on its own Act. See the glossary entry on the Employment Standards Act.

Questions to settle before closing

• Does the business fall under the territorial Act, or is it a federally regulated sector the Government of Yukon says the Act does not cover?
• What is each employee’s original start date, and how many weeks of vacation and vacation pay are outstanding?
• Does any employee fall within an exclusion in section 49(1), or is any represented by a union for collective bargaining?
• Who will give written notice under section 50 if some staff will not move to the buyer?
• Does the purchase agreement say who is responsible for wages, vacation pay and notice owing up to the closing date?