Toronto Labour & Employment Lawyers Advising Employers & Employees on Mergers, Acquisitions and Sale of Business
Ontario law protects employees who work for a business that is sold, acquired, transferred or that merges with another business.
Under the Employment Standards Act, which applies to most workplaces in Ontario, when a business is sold or transferred to a new owner, the past employment of any employee who continues to work for the business is recognized. That person’s length of employment is then attributed to the new employer, who must recognize the time that the person had worked for the previous employer and that time must be credited towards any rights that the employee has that are based on his or her length of employment.
The Labour Relations Act provides for similar protections for employees in unionized workplaces.
What Does This Mean for Employers?
If you are an employer who is purchasing a business or merging with a business, it is critical to consult with a knowledgeable labour & employment lawyer who can counsel you about potential risks and liabilities, advise on a plan to address and mitigate those liabilities, and help you move forward successfully while maintaining any obligations that may arise with respect to the employees of the business you are purchasing or merging with.
At Mallins Law, we have many years of experience advising employers across Canada. We have helped unionized and non-unionized businesses of every size, including some of Canada’s largest employers. With our guidance, employers can ensure the continued success of their venture during major corporate changes while maintaining their legal obligations towards any employees.
For Unionized Employers
Where a unionized business or workplace is sold, transferred, or merged with another business or workplace, the purchaser becomes the “successor employer” and becomes bound by any collective agreements that were applicable to the predecessor employer. This also means that the successor employer takes over any obligations and outstanding litigation, arbitration, collective bargaining, and other matters that may have been ongoing as though it was a party to the agreement.
Obligations towards employees in a unionized workplace will be the same, irrespective of how the sale, transfer, or merger is structured (i.e. regardless of whether it is a share acquisition or asset purchase).
For Non-Unionized Employers
Most employees are entitled to rights and benefits under the Employment Standards Act, including vacation, leave time (pregnancy leave, parental leave, personal emergency leave, family caregiver leave, etc.), notice of termination, notice of mass termination, etc.
It is important for employers to assess the potential costs that may arise if that employer decides to make changes to the workforce that they are inheriting as part of a sale or merger.
Obligations towards existing employees will differ depending on whether the transaction between two employers is an acquisition of shares (i.e. a change in ownership of share equity) or an asset purchase.
What Does This Mean for Employees?
If the business you work for is sold to a new owner or merges with another business you should not lose any rights, benefits, or salary. If you continue to work for the business, the new employer will have to recognize your years of service, as well as any benefits that accrued with those years of service (including vacation time, etc).
If you are terminated or constructively dismissed, the new employer must provide you with notice or pay in lieu of notice that is based on the length of time that you worked for the previous employer. If they do not do so, you may have grounds to sue them for wrongful dismissal.
At Mallins Law, our knowledgeable and compassionate Toronto employment lawyers have helped hundreds of employees during times of transition in their workplaces. We can answer any questions that you may have, help you proactively plan ahead, and ensure your rights are protected.
Mallins Law: Employment Lawyers Providing Proactive Guidance to Employers and Employees on Mergers, Acquisitions and Sales of Business
If you have questions about the impact that a sale of business, merger, or acquisition will have on you contact one of the experienced Toronto employment lawyers at Mallins Law for guidance on protecting your rights and interests and meeting any legal obligations you may have. Call us at 647-792-0310 or contact us online for a consultation.