What Happens to Employees When a Company Is Sold in Canada?

Employees often worry about one thing first when a company is sold: do they still have a job?

In Canada, a business sale does not automatically end employment or trigger severance pay. What happens next depends on how the business is sold and how the sale affects your employment.

This guide explains the general rules across Canada, and when your provincial rights matter most.

Are Employees Automatically Transferred to the New Owner?

Sometimes — but not always.

The type of business sale and the buyer’s decision determine whether employees transfer.

Asset Sale

In an asset sale, the buyer purchases things like equipment, property, or client lists — not the company itself.

• Employees are not automatically transferred
• Workers who are not rehired are typically treated as terminated
• The seller is usually responsible for severance obligations

Share Sale

In a share sale, the buyer purchases the company’s shares.

• Employees usually continue working without interruption
• The employer legally remains the same
• An employer only owes severance if it later lets employees go

Does a Business Sale Automatically Trigger Severance Pay?

No.

A business sale by itself does not create a right to severance. Severance becomes an issue if the sale results in:

• Job loss
• A demotion or pay cut
• A forced move or major role change
• Pressure to accept a worse employment contract

What Happens to an Employee’s Length of Service?

If a new owner keeps employees on, the employer often preserves their length of service.

This matters because length of service affects:

• Severance entitlements
• Benefit calculations
• Termination rights later on

Some employers attempt to reset service through new contracts. Employees should be cautious — signing a new agreement can permanently reduce future entitlements.

Do Employees Have to Sign a New Employment Contract After a Sale?

No.

Employees generally can’t be forced to sign a new employment contract immediately after a business sale.

New contracts may attempt to:

• Limit severance to minimum standards
• Remove recognition of past service
• Add restrictive termination clauses

Why Provincial Law Matters

Employment rights in Canada are governed primarily by provincial law, not a single national rulebook.

That means outcomes can differ depending on where you work, including in:

• Ontario
• Alberta
• British Columbia

For province-specific guidance, see:

• 👉 Sale of a Business & Severance in Ontario
• 👉 Sale of a Business & Severance in Alberta
• 👉 Employee Rights When a Business Is Sold in British Columbia

Each province applies its own employment standards and common-law rules.

Key Takeaway for Employees

A business sale does not erase employee rights.

Provincial law may entitle you to severance or other compensation if:

• Your employer ends your job
• Your employer significantly changes your role or pay
• Your employer pressures you to accept a worse contract

Because outcomes depend on provincial law and the structure of the sale, employees should get legal advice before accepting termination pay or signing anything new.

Next Steps

If your employer sells the business and affects your job, an experienced employment lawyer can explain your rights before you accept severance or sign anything new.

The team at Samfiru Tumarkin LLP has helped more than 50,000 non-unionized employees enforce their workplace rights when employers fail to follow the law.