Employment Law

Sale of business in Ontario: Rights to severance


In Ontario, non-unionized workers 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?

The seller of the business must provide employees in Ontario with severance pay if they lose their job as a result of the sale.

  • Example: Ford sells its Oakville automotive facility to General Motors. If you work at the Oakville facility, and General Motors doesn’t want to keep you as an employee, then Ford 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.

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How is severance pay calculated?

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

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

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

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.

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Can the new owner make changes to my job if they keep me on?

You don’t have to accept major changes to your job that the new owner might try to enforce.

Large modifications such as a demotion, cut in pay, reduction in hours, or negative change to commission are illegal.

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 business.

  • Example: A worker’s role was eliminated due to a merger that resulted in an organizational restructuring. She 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 15 per cent cut in pay. These changes 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, but you would likely only receive your minimum entitlements.

If the new owner keeps you on without any changes to your position, but begins making significant alterations shortly after, it’s very likely that you could treat it 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 Ontario employment lawyer at Samfiru Tumarkin LLP.

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

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

  • Example: You worked at your company’s Toronto facility for 12 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 three years later, you are still owed severance pay based on the seniority that you built up before and after the sale.

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.

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

Employers in Ontario 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 often take away protections that would otherwise be available to you.

Employment contracts in Ontario

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
  • 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 sign you new employment contract immediately, remain calm and contact an experienced Ontario employment lawyer at Samfiru Tumarkin LLP.

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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 Toronto and Ottawa can review your situation, enforce your workplace rights, and ensure that you receive the compensation you are owed.

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