If a business is sold in Canada, employees do not automatically lose their jobs, years of service or employment rights.

What happens depends mainly on how the business is sold, whether the buyer keeps you employed and whether your pay, position or other important job terms change. A business sale by itself does not automatically trigger severance.

The biggest mistake is making a permanent decision too quickly. Don’t resign, reject a new owner’s job offer or sign a new employment contract or release before understanding the consequences. Any of those decisions can affect your severance and future rights.

⚠️ Your employer selling the business is not a reason to resign. If the buyer offers you a job, don’t reject it or sign new terms on the spot. Either decision can affect your severance rights.

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What Happens to Your Job When a Business Is Sold?

Your job can continue, move to the purchaser or end, depending on the structure of the sale.

For most non-unionized employees, there are three common outcomes:

  • You continue working with no meaningful change. The sale itself usually does not trigger severance.
  • The purchaser offers you employment. Your previous service can remain important and provincial employment standards laws often protect continuity of service.
  • Your employment ends. You can be entitled to proper termination compensation from the employer responsible for ending your job.

A fourth issue arises when the job technically continues but important terms become worse. A serious pay cut, demotion, reduction in responsibilities or forced relocation can create constructive dismissal rights.

Share Sale vs. Asset Sale: Why Does It Matter?

A share sale normally leaves your legal employer unchanged, while an asset sale can involve a new employer.

What happens in a share sale?

In a share sale, someone buys the shares of the company that already employs you. The company itself remains your employer.

That normally means your employment continues without interruption. Your original start date does not reset just because the company has new shareholders.

What happens in an asset sale?

In an asset sale, the purchaser buys some or all of the business assets rather than the shares of the corporation.

The buyer can be a different legal employer. It can offer employment to the seller’s workers, but employees do not simply become employees of the purchaser in the same way they normally continue through a share sale.

If you are not offered continuing employment and your existing job ends, your termination and severance rights become important.

💡 Ask whether the transaction is a share sale or an asset sale. That one fact can explain a great deal about what is happening to your employment.

What Happens to Your Years of Service?

Your years of service often remain legally important when you continue working after the business is sold.

Employment standards legislation in major Canadian jurisdictions contains continuity rules designed to prevent employees from simply losing accumulated service because a business changes hands.

For example, Ontario treats previous service as continuous for employment-standards purposes when a purchaser employs an employee of the seller and the statutory requirements are met. Alberta and British Columbia also protect continuity of service when employees continue working following qualifying business sales or transfers.

That service can affect future rights such as:

  • Termination notice or pay
  • Vacation entitlements
  • Statutory severance where applicable
  • Other rights based on length of employment.

Common-law severance requires a separate analysis, particularly after an asset sale or where the purchaser asks you to sign a new agreement.

Learn more about continuous employment in Canada.

Do You Get Severance When a Business Is Sold?

Not simply because the business was sold. Severance becomes an issue when the sale results in your employment ending or creates a constructive dismissal.

If your job ends because of the sale, you are entitled to the termination compensation legally owed to you.

For many non-unionized employees, that can be substantially more than employment-standards minimums. Depending on factors such as your age, position, length of service and the availability of similar work, severance pay can reach 24 months’ pay.

What if the buyer offers you another job?

Don’t reject a substantially similar job with the purchaser before getting legal advice.

You generally can’t be forced to work for a different employer. However, a dismissed employee also has a duty to take reasonable steps to reduce their losses. Refusing suitable employment with the purchaser can therefore reduce the common-law damages recoverable from the seller.

Compare the whole offer, including:

  • Salary and bonus
  • Benefits and vacation
  • Job title and responsibilities
  • Hours and work location
  • Recognition of prior service
  • Termination terms in the new contract
⚠️ A buyer’s job offer and your severance claim can be connected. Rejecting comparable work without advice can cost you compensation even when you were legally terminated by the seller.

Can the New Owner Change Your Job?

A business sale does not automatically give the employer the right to impose major negative changes to your employment.

A substantial unilateral change can amount to constructive dismissal. Examples can include:

  • A significant pay cut;
  • A demotion or major loss of responsibility;
  • A substantial reduction in hours;
  • A major negative change to bonus or commission pay; or
  • A forced relocation that significantly changes your commute or workplace.

Don’t resign because of a major change before determining whether it crosses the constructive dismissal threshold.

Do you have to sign a new employment contract?

You do not have to sign a new contract on the spot simply because the business has been sold.

In an asset sale, however, the purchaser can make a new agreement part of its offer to employ you. That creates an important decision: rejecting suitable employment can affect a severance claim, while signing restrictive new terms can reduce your future rights.

Watch for clauses that:

  • Limit future severance
  • Ignore previous service
  • Change salary, bonus or benefits
  • Introduce a new probation period
  • Add new post-employment restrictions.

Have any proposed employment contract reviewed before you sign.

What Should You Do If Your Employer Is Selling the Business?

Get the details in writing before making decisions about your job, severance or a new contract.

  1. Find out whether your job is continuing. Ask whether you remain with the same employer or will receive an offer from the purchaser.
  2. Ask whether it is a share or asset sale. The structure affects how employment continues.
  3. Keep your existing documents. Save your contract, pay records, bonus plans and benefit information.
  4. Compare any new offer carefully. Look beyond salary to service, duties, location, benefits and termination rights.
  5. Don’t resign or reject an offer impulsively. Either can affect your compensation.
  6. Don’t sign a release without review. Once signed, you usually can’t pursue more severance later.

Business-sale rights by province

Provincial employment standards rules can change the details. For more specific guidance, see:

⚠️ Unionized? A business sale can involve successor-employer and collective-agreement rights. You need to address these issues through your union and the grievance process. Samfiru Tumarkin LLP’s employment law team can’t assist with unionized workplace disputes.

Business Sale Employee Rights FAQs

Do employees automatically lose their jobs when a business is sold?

No. Many employees continue working. What happens depends largely on the type of sale and whether the purchaser keeps them employed.

Does my seniority reset when the company is sold?

Not automatically. Provincial employment standards laws often preserve prior service when employees continue working after a qualifying business sale.

Can I refuse a job with the new owner?

Yes, but refusing suitable replacement employment can affect common-law severance damages. Get advice before rejecting the offer.

Does a business sale automatically mean severance?

No. Severance becomes an issue when your employment ends or the sale results in a constructive dismissal.

A business sale does not erase your employment rights. The important questions are whether your employment continues, whether your service is protected, whether your terms are changing and what you are owed if your job ends.

Before you resign, reject the purchaser’s offer, sign a new contract or accept a severance package, have the situation reviewed by Samfiru Tumarkin LLP. Our employment lawyers can determine what you are owed and work to secure full compensation.

Is Your Employer Selling the Business?

Before rejecting a buyer’s offer, signing a new contract or accepting severance, understand how the sale affects your rights.

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