Canadian small business owners plan to exit within next decade, report finds

According to a recent report by the Canadian Federation of Independent Business (CFIB), 76 per cent of small business owners in the country are planning to exit their business within the next 10 years.

However, the CFIB found that only one in 10 business owners have a formal succession plan in place.

“Not having a formalized succession plan could result in lost jobs, bankruptcies or loss of stability for the business,” said Laure-Anna Bomal, a research analyst at CFIB.

“A majority of business owners rely on the sale of their business to fund their retirement. If they can’t sell their business, they’d have to delay their retirement. That adds another stress to the owner, their family and employees.”

The biggest challenge for more than half of the small business owners surveyed is finding a suitable buyer or successor.

90 per cent want to ensure that their current employees will be protected when the business comes under new management.

The CFIB notes that more than $2-trillion in assets could change hands within the next decade if small business owners commit to their current exit timelines.

SEE ALSO
• 50% of Canadians plan to change jobs in 2023, survey finds
• Survey: Canadian businesses to keep hiring despite recession fears
• ‘Alberta is Calling’: What to consider before changing jobs

Who pays severance if the new owner doesn’t want to keep me?

In Canada, the seller of the small business must provide non-unionized employees with severance pay if they lose their job as a result of the sale.

• Example: You work for a family-owned pizza restaurant in Toronto. Your employer, Bill, tells you that he is selling the business to a major pizza chain. If the new owner of the restaurant doesn’t want to keep you as an employee, then Bill must provide you with a severance package.

If you lose your job as a result of a sale, and your employer refuses to provide you with severance, contact an experienced employment lawyer at Samfiru Tumarkin LLP immediately.

ADDITIONAL RESOURCES
• Sale of business in Ontario: Rights to severance
• Business sold in Alberta? Employee rights to severance
• Selling businesses in B.C.: Rights to severance

How is severance pay calculated?

Severance for non-unionized employees in Canada can be as much as 24 months’ pay.

The amount of compensation you are entitled to is calculated using several factors, including:

• Age
• Position at the company
• Length of service
• Ability to find new work

WATCH: Employment lawyer Lior Samfiru explains everything you need to know about severance pay on an episode of the Employment Law Show.

Our firm’s free Severance Pay Calculator can help you figure out how much you are owed.

If the offer from your boss falls short of what is legally appropriate, you have been wrongfully dismissed.

An experienced employment lawyer at Samfiru Tumarkin LLP can help you file a claim to ensure that you receive proper compensation.

LEARN MORE
• Severance pay for provincially regulated employees
• Rights to severance for short-service employees
• Severance pay in a recession

The new owner wants to make major changes to my job, can they do that?

If the small business that you work for comes under new management, you don’t have to accept significant adjustments to the terms of your employment.

Large modifications, such as a demotion, longer shifts, or reduced pay, are illegal in Canada.

If you receive an employment offer from the new owner, and it includes different hours or pay, you can turn it down and still get full severance from the seller of the small business.

• Example: A woman worked for an independent automotive repair shop in Calgary. Her employer told her that she is going to sell the business to a competitor in Edmonton. Once the sale was complete, the new owner offered her an alternative role at the company, but it required her accepting a 20 per cent cut in pay. This negative change to her employment made it reasonable for her to reject the new offer and she was still able to receive her severance entitlements.

Even without a good reason, you can still get severance. However, it’s very likely that you will only receive your minimum entitlements.

If the new owner of the small business keeps you on without any changes to your position, but begins making substantial adjustments shortly after, there is a good chance that you can treat the move as a constructive dismissal.

In this situation, the law allows you to resign and pursue full severance pay.

If you believe that you have been constructively dismissed, don’t quit your job until you speak with an experienced employment lawyer at Samfiru Tumarkin LLP.

LEARN MORE
• Changes to your employment in Alberta: What you should know
• Do I get severance if I quit?

The new owner wants to keep me, what happens to my length of service?

If the company that purchased the small business decides to hire an existing employee on, they generally inherit the worker’s length of service.

• Example: You worked at a family-owned bakery in Vancouver for 15 years before your employer decided to sell the business. If the new owner keeps you, they must acknowledge your length of service. If you are fired two years later, you are still owed severance pay based on the seniority that you built up before and after the sale of the bakery.

Once you receive an employment offer from the new owner, review the contract carefully before accepting it.

Some employers try to get out of recognizing a worker’s length of service in the new agreement.

Not only could this affect the amount of severance pay you receive if you are let go in the future, but it would also limit the entitlements of your total compensation package.

If you are unsure about what you are signing, have an experienced employment lawyer at Samfiru Tumarkin LLP review the contact.

We can make sure it contains the correct clause to protect your seniority.

SEE ALSO
• Starting a new job? Here’s how an employment contract could limit your rights
• Employment Law Show: 5 things to know about employment contracts

The new owner wants me to sign my new employment contract immediately, what should I do?

In Canada, employers can’t legally force non-unionized workers to sign a new employment contract immediately.

While many employees believe that they need to sign as soon as possible to protect themselves, these agreements often take away protections that would otherwise be available to you.

In addition to trying to get out of recognizing your length of service, the new owner of the small business might attempt to add clauses that:

• Limit your rights at the outset of your employment
• Allow the company to make changes to the terms and conditions of your employment
• Limit your severance package to a few weeks’ pay
• Allow the company to lay you off without penalty in the future

If you are being pressured to accept your new employment contract immediately, don’t sign anything until you speak with an experienced employment lawyer at Samfiru Tumarkin LLP.

SEE ALSO
• ’60 days or more’: Is it an enforceable termination clause?
• Employment Law Show: 5 things to never do before seeking legal counsel
• Accepted a severance offer without consulting a lawyer? Next steps

Lost your job? Speak with an employment lawyer

If you lose your job after your employer sells the business, or for any reason, contact the experienced employment law team at Samfiru Tumarkin LLP immediately.

Our lawyers Toronto, Ottawa, Calgary and Vancouver, can review your situation and ensure that your workplace rights are properly enforced. We have helped tens of thousands of individuals in Ontario, Alberta and B.C. get the compensation and justice they deserve.