Employment Law

Sale of business in Alberta: Rights to severance


Non-unionized workers in Alberta aren’t automatically entitled to severance if their employer sells the business.

However, if the sale of the business results in you losing your job, you are owed severance pay.

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

In Alberta, the seller of the business owes you severance pay if you lose your job as a result of the sale.

  • Example: Suncor Energy sells Petro-Canada to Husky Energy. If you work for Petro-Canada, and Husky Energy doesn’t want to keep you as an employee, then Suncor Energy must provide you with a severance package.

If you receive an employment offer from the new owner, and have a good reason for why you don’t want to accept it (i.e. different hours or pay), you can still get full severance pay from the company that sold the business.

  • Example: A worker’s role was eliminated due to a merger that resulted in an organizational restructuring. He was offered a replacement role with the newly formed company, but it was going to be a demotion with decreased and altered job duties. The individual would also have to accept a roughly 25 per cent cut in pay. These changes to his employment made it reasonable for him to reject the new offer and he was still able to receive his severance entitlements.

Even without a good reason you can still get severance, but you would only receive your minimum entitlements.

• If Suncor sells Petro-Canada, what rights do employees have?
• Employee rights when a company closes

How is severance pay calculated?

Severance packages in Alberta are based on your specific circumstances. These factors include your:

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

Our Severance Pay Calculator can help you figure out how much compensation you are owed.

An employment lawyer at Samfiru Tumarkin LLP can also review your situation to ensure you are receiving proper severance.

Severance Pay in a Recession
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WATCH: Employment lawyer Lior Samfiru explains why you are still owed severance if you are downsized on an episode of the Employment Law Show.

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

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

  • Example: You worked at your company’s Calgary facility for 18 years prior to the sale. If the new owner decides to keep you, they must acknowledge your length of service. If you are let go two years later, you are still owed severance pay based on the seniority that you built up before and after the sale.

However, recognition of your length of service can depend on whether the business purchase is an asset purchase or share purchase.

Once you receive an employment offer from the new owner, review the contract carefully before accepting it. Employers might attempt to get out of recognizing your length of service in the new agreement.

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

If you are unsure about what you are signing, an experienced employment lawyer at Samfiru Tumarkin LLP can review the contact and ensure it contains the correct clause to protect your seniority.

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

Employers in Alberta can’t legally force you to sign a new employment contract. While many workers believe that they need to sign to protect themselves, these agreements almost always benefit the company instead.

Employment contracts 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 business might attempt to add clauses that:

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

Lost your job? Contact 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 in Calgary and Edmonton can review your situation, work to secure proper compensation, and ensure that your workplace and human rights are properly enforced.

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