What Happens to Your Job When Your Company Gets Sold? A Complete Guide for Employees

If you've just learned that your company is being sold, you're probably wondering: "What does this mean for my job?" It's a valid concern that keeps many employees up at night. Will you be fired? Will your years of service count toward severance? What are your rights?

The truth is, the impact on your employment depends largely on how the business is being sold. Let's break down everything you need to know to protect yourself during this uncertain time.

The Two Ways Companies Get Sold (And Why It Matters to You)

When a business changes hands, there are typically two ways this can happen:

Share Sale: The new owner buys the company's shares, essentially purchasing the entire corporation as it exists. Think of it like buying a house with all the furniture included – the legal identity of the company stays the same.

Asset Sale: The new owner purchases only the business assets (equipment, inventory, customer lists, etc.) but not the corporation itself. This is more like buying just the furniture from a house – the legal structure changes completely.

Why does this distinction matter? Because it dramatically affects what happens to your employment.

Share Sales: Generally Good News for Employees

In a share sale, you'll typically keep your job without interruption. Since the corporation's legal identity doesn't change, your employment contract remains intact. You'll continue working as if nothing happened – same employer, same terms, same accumulated years of service.

The only exception is if the sale agreement specifically states that employees will be terminated, but this is relatively rare.

Asset Sales: More Complicated Territory

Asset sales are where things get tricky. Historically, when assets are sold, all employees are automatically terminated because employment contracts can't be transferred to new owners under Ontario law.

However, don't panic just yet. Many purchasers will offer to hire the previous owner's employees as part of the deal. The key question becomes: what happens to your years of service?

Your Years of Service: Why They Matter and How Sales Affect Them

Your length of service is crucial because it directly impacts your severance entitlements if you're ever terminated. More years typically mean more severance pay.

In Share Sales: Your service time continues uninterrupted. If you're terminated later, all your years count toward severance calculations.

In Asset Sales: This is where it gets complex. Technically, you're starting fresh with a new employer, which could reset your service clock to zero. However, there's important protection under Ontario law.

The Employment Standards Act Protection You Need to Know About

Section 9 of Ontario's Employment Standards Act provides crucial protection. If a business purchaser agrees to hire the previous owner's employees, your employment is considered continuous for statutory purposes.

This means your accumulated benefits – including vacation time, statutory notice periods, and severance pay entitlements – transfer to the new employer. Your years of service aren't lost; they're recognized by law.

What About Common Law Severance?

Beyond the Employment Standards Act minimums, you might be entitled to common law reasonable notice, which can be significantly more generous (potentially up to 24 months of pay).

Even in asset sales, courts may consider your prior years of service when calculating what the new employer owes you if you're terminated. This is especially true if your new employment agreement explicitly recognizes your previous service.

Calculating Your Notice Period After a Sale

If you're terminated without cause, you're entitled to reasonable notice. The Employment Standards Act provides minimums (one week per year of service, up to eight weeks), but you may be entitled to much more under common law.

When a business is sold, the Employment Standards Act ensures your entire service history counts toward these calculations. The new owner must recognize your full employment history when determining your entitlements.

Red Flags to Watch For

Be cautious if the new employer asks you to sign a new contract that:

• Doesn't recognize your previous years of service

• Significantly reduces your compensation or benefits

• Contains restrictive termination clauses

These could be attempts to limit your rights and reduce potential severance obligations.

Your Duty to Mitigate

If you are terminated, remember that you have a legal duty to mitigate your damages. This means you must make reasonable efforts to find new employment. Document your job search efforts and consider comparable offers from the new employer, as refusing reasonable employment could reduce your severance entitlements.

When to Seek Legal Help

Consider consulting an employment lawyer if:

• You're being asked to sign new documents during the sale process

• Your new employer isn't recognizing your years of service

• You're being terminated as part of the sale

• You're unsure about your rights and entitlements

An employment lawyer can review your specific situation, protect your interests, and ensure you don't inadvertently give up valuable rights.

The Bottom Line

While business sales can be unsettling, Ontario law provides important protections for employees. Your rights depend on the type of sale and specific circumstances, but you're not powerless in this situation.

The key is understanding your rights, documenting everything, and seeking professional advice when needed. Remember, knowledge is your best protection during times of workplace uncertainty.

Don't let fear paralyze you – arm yourself with information and take proactive steps to protect your interests. Your career and financial security are worth fighting for.

Until next time,