What Happens to Employees If a Business Is Sold in Ontario?

If your employer sells the business in Ontario, what happens to your job, severance, and employment rights? This is a common — and important — question for non-unionized employees. Whether you’re transferred to the new owner or let go, the law provides protections you need to know about.

In this guide, we break down your legal rights when a business is sold, and what happens during a transfer of employment in Ontario.

Does the Sale of a Business Terminate Your Employment?

Not always. When a business is sold in Ontario, the outcome depends on whether the business is sold as a share sale or asset sale.

• Share sale: Your employer stays the same, only ownership changes. Your job and employment contract typically remain unchanged.
• Asset sale: The purchasing company is a different legal employer. Your job may be offered by the new owner — but you’re not required to accept it.

Transfer of Employees from One Company to Another in Ontario

In an asset sale, the buyer can choose whether to hire the existing staff. If they do:

• Your seniority usually carries over (your original start date still counts)
• Your total years of service remain intact, even though you’re working for a new employer
• You may be asked to sign a new employment contract — this is where caution is needed

Don’t sign anything without legal advice. Some employers use this opportunity to reduce severance obligations, limit future entitlements, or introduce restrictive clauses.

What If You’re Let Go When the Company Is Sold?

If you’re not hired by the buyer or your employer terminates your job because of the sale, you are entitled to:

• Full severance pay in Ontario — which can be as much as 24 months’ pay
• Unemployment benefits (EI) if you’re not re-employed immediately
• A consultation with an employment lawyer to review your rights and maximize your payout

Under Ontario law, a sale of business is not a valid reason to avoid severance pay. You can’t be denied severance just because the company was sold.

Notice to Employees When Selling a Business

Are employers required to give notice to staff when selling the company?

In most cases:

• No legal requirement exists to inform employees in advance (especially in a share sale)
• However, if your job is being terminated or changed, you must be given reasonable notice or severance pay

If you’re only told about the sale after losing your job — or pressured to accept new terms without understanding your rights — you should speak to an employment lawyer right away.

What Are My Rights If My Employer Sells the Business?

Here’s a summary of your rights as a non-unionized employee in Ontario:

• ✅ You don’t have to accept a job offer from the buyer
• ✅ You retain years of service if hired by the new company
• ✅ You’re entitled to severance if terminated or if major changes occur
• ✅ You may be eligible for EI if you’re unemployed after the transition
• ✅ You can challenge a new contract that reduces your rights

➡️ Wrongful Dismissal After a Sale? Here’s What You Need to Know in Ontario

If a Business Is Sold, Can You Collect Unemployment?

Yes. If you lose your job as part of the sale and you’re not immediately hired, or if you decline a job offer with significantly different terms, you may be eligible for:

• Employment Insurance (EI) benefits
• Severance and termination pay from your former employer

Just be aware: If you quit voluntarily (e.g., by signing a resignation or rejecting a comparable offer), you may lose access to EI — and it could impact your severance claim. Always get legal advice first.

Termination Due to Sale of Business: Can You Fight It?

Yes — and many employees successfully do. Termination due to sale of business can lead to:

• A wrongful dismissal claim if proper severance isn’t paid
• A constructive dismissal claim in Ontario if the new role is worse than your original job

Many employers hope you won’t challenge their offer. But you have more power than you think — especially if you’ve been with the company for years.

What to Do If You’re Affected by the Sale of a Business

1. Don’t sign anything immediately — not even a new contract
2. Gather all your paperwork (offer letters, contracts, ROEs, emails)
3. Use the Severance Pay Calculator to estimate what you’re owed
4. Book a consultation with an employment lawyer

Samfiru Tumarkin LLP has helped thousands of Ontario employees understand their rights and secure maximum severance after a business sale.

Speak to an Employment Lawyer in Ontario Today

If your employer has sold the business and you’re unsure what comes next, don’t guess — get answers before you make a decision.

Samfiru Tumarkin LLP helped over 50,000 Ontarians protect their rights. We can help you too.

📞 Call 1-855-821-5900 or use our consultation form today.