If an employee works for a company and the company is sold to another company and he/she continues to be employed with the new company, his/her length of service with the previous company is now added to the length of service with the new company under the Employment Standards Act, 2000. What this means is that his/her entitlements under the Act with the previous company are not lost and now become the obligations of the new company. Of course, the previous company is still responsible for all the wages including vacation pay, public holiday pay, overtime pay etc. earned up to the date of his/her employment with that company. However, termination pay and severance pay would become the obligation of the new company and in calculating the amount, total period of employment would be considered.
If the new company does not retain his/her services, or hires him/her after 13 weeks from the time it bought the business, the termination pay and severance pay if applicable would be the obligations of the previous company. Otherwise, the new company is obligated to pay both the termination pay and severance pay if applicable.
The Act defines sale of business in a very broad form and includes leases, transfers or disposal in any other manner.
This entitlement is particular important in a situation where one contractor is replaced by another contractor to provide services such as cleaning etc. and continues to employ the employee. The period of employment with the new contractor would include the period of employment with the previous contractor for the purpose of any entitlement arising under the Act. In other words, if one contractor employs an employee and that contractor loses the contract subsequently to another contractor and the new contractor continues to employ the employee, the period of employment with the previous contractor would be added to his/her length of service with the new contractor. However, if the new contractor does not employ the employee, or employs him/her after a gap of 13 weeks, the previous contractor is required to pay all his/her entitlements under the Act.
This information is only provided to guide you about your entitlements under the Employment Standards Act, 2000 and should not be considered as a legal advice.
If you have any questions regarding your employment, please contact the writer by e-mail at [email protected] if you don’t have access to e-mail; you can fax your question at (905) 331-1805.