If a business is sold in Ontario, employees do not automatically lose their jobs, years of service or termination rights. What happens to you depends mainly on how the business is sold, whether the buyer keeps you employed and whether your job terms change.
In a share sale, your legal employer usually stays the same and only the ownership changes. In an asset sale, the purchaser is a different employer and can decide whether to offer you employment. If the purchaser does employ you, Ontario’s Employment Standards Act (ESA) has important rules protecting continuity of service.
The biggest mistake is making a permanent decision too quickly. Don’t resign, reject a buyer’s job offer or sign a new employment contract or release before you understand the consequences. A new agreement can affect future severance rights, while rejecting suitable employment can affect the compensation recoverable after a dismissal.
On This Page:
- 1. Your Rights When a Business Is Sold
- 2. Share Sale vs. Asset Sale
- 3. Do Your Years of Service Carry Over?
- 4. Are You Owed Severance?
- 5. Job Changes and New Contracts
- 6. What You Should Do
- 7. Frequently Asked Questions
What Are Your Rights If Your Employer Sells the Business?
If your employer sells the business, your rights depend on what happens to your employment—not simply on the fact that ownership changed.
For a non-unionized Ontario employee, the practical outcomes usually fall into one of these situations:
- You keep working with no meaningful change. The sale itself does not automatically entitle you to a severance payment.
- The buyer employs you after an asset sale. Ontario’s ESA can treat your service with the seller and purchaser as continuous.
- Your employment ends because of the sale. You are entitled to the termination notice or compensation legally owed to you.
- The new owner substantially changes your job. A serious pay cut, demotion, loss of responsibilities or forced relocation can create constructive dismissal rights.
- You are asked to sign a new contract. The new agreement can affect your future severance and other employment rights, so it should be reviewed before you sign.
Ontario’s statutory continuity rules specifically provide that when a business is sold and the purchaser employs an employee of the seller, the employment is deemed not to have been terminated for ESA purposes and the employee’s prior service is carried into future length-of-employment calculations.
Does It Matter Whether the Business Is Sold Through a Share Sale or Asset Sale?
Yes. The difference between a share sale and an asset sale can completely change what happens to your employment.
What happens in a share sale?
In a share sale, the company that employs you remains the same legal employer. Someone new owns the shares of the company, but you are still employed by the same corporation.
That usually means your employment continues without interruption. Your start date does not reset simply because the shareholders changed, and the sale itself is not a termination that automatically triggers severance. STLAW’s existing Ontario guidance reflects this distinction.
What happens in an asset sale?
In an asset sale, the purchaser is usually a different legal employer, so employees do not automatically become employees of the buyer.
The purchaser can offer employment to some or all of the seller’s employees. If you are not hired and your employment with the seller ends, your termination and severance rights become important.
If the purchaser does employ you, however, Ontario’s ESA protects continuity in qualifying business-sale situations. Your prior employment with the seller is counted when future ESA entitlements based on length of employment are calculated.
Do Your Years of Service Carry Over When a Business Is Sold?
Yes, for ESA purposes, your prior service normally carries over when the purchaser employs you and Ontario’s sale-of-business continuity rules apply.
For example, if you worked for the seller for 12 years and continue working for the purchaser after the sale, the purchaser cannot simply say that you have “zero years of service” when calculating future ESA rights.
That continuity matters because length of employment affects rights such as statutory termination notice and, where the eligibility requirements are met, statutory severance pay.
Your rights under common law require a separate analysis. Prior service can remain important when future severance is calculated, but a new employment agreement can affect the result.
Before signing, review the agreement carefully. Our guide to employment contracts in Ontario explains how written terms can affect severance and other workplace rights.
Are You Owed Severance When a Business Is Sold in Ontario?
You are not automatically owed a severance payment simply because the business was sold. Severance becomes a central issue when your employment ends.
If the seller terminates your employment and the buyer does not employ you, you are entitled to the notice or compensation required by law. The sale of the business does not allow the employer to avoid its normal termination obligations.
How much severance can you receive?
Don’t assume Ontario’s employment standards minimum is your full severance entitlement.
For many non-unionized employees, common-law rights provide substantially more compensation unless an enforceable employment contract validly limits those rights. The amount can depend on factors such as your age, position, length of service and the availability of similar employment.
Depending on those factors, severance can reach 24 months’ pay. Learn more about severance pay in Ontario.
What if the buyer offers you another job?
Don’t reject a substantially similar job with the purchaser before getting legal advice.
You cannot be forced to work for a new employer. However, a dismissed employee has a duty to take reasonable steps to reduce their losses. Refusing suitable employment can therefore affect the amount of common-law damages recoverable in a wrongful dismissal claim.
The right decision depends on the actual offer. Compare the salary, bonus, benefits, title, duties, location, hours, seniority recognition and termination terms before deciding whether to accept or reject it.
What if the buyer fires you shortly after the sale?
If the purchaser employs you and later terminates you, it cannot simply ignore your prior service when Ontario’s ESA continuity provision applies. Your former service must be included in subsequent ESA length-of-employment calculations.
Your full common-law entitlement will also depend on your contract and the circumstances of the employment transition. Have the package reviewed before signing a release.
Can the New Owner Change Your Job or Make You Sign a New Contract?
A business sale does not automatically give an employer the right to impose major negative changes to an existing employment relationship.
What if your pay, duties or location change?
A substantial unilateral change to an important term of employment can amount to constructive dismissal.
Examples can include:
- A significant pay cut
- A serious reduction in hours
- A demotion or substantial loss of responsibility
- A major change to commission or bonus compensation
- A forced relocation that significantly changes where you work
If the change is serious enough, the law can treat the employment relationship as having been terminated, potentially entitling you to severance. Learn more about constructive dismissal in Ontario.
Do you have to sign a new employment contract?
You do not have to sign a new agreement on the spot simply because the business is being sold.
In an asset sale, the purchaser can make a new employment agreement part of its offer to employ you. That makes the decision important: refusing the offer can affect your severance position, while accepting restrictive terms can affect your future rights.
Before signing, look closely at:
- Whether your previous years of service are recognized
- Termination and severance clauses
- Salary, bonus and commission terms
- Benefits and vacation
- Job title, duties and work location
- Probation clauses
- Non-solicitation or other post-employment restrictions
- Any release of claims against the seller or purchaser
A contract can have consequences long after the sale closes. Review it before accepting terms that reduce rights you already have.
What Should You Do If Your Employer Is Selling the Business?
Get the details in writing before making a decision about your job, severance or a new employment agreement.
If you learn that your employer is selling the business:
- Find out whether your job will continue. Ask whether you will remain with the same employer or receive an offer from the purchaser.
- Ask whether it is a share sale or asset sale. The answer can change how the employment transition works.
- Keep your existing documents. Save your employment contract, amendments, pay statements, bonus plans and benefit information.
- Compare any new offer carefully. Look beyond salary and check service recognition, title, responsibilities, location, benefits and termination language.
- Don’t resign or reject an offer impulsively. Your response can affect a later severance claim.
- Don’t sign a release without knowing its effect. A release can prevent you from pursuing additional compensation later.
- Calculate your full severance if your job ends. The ESA minimum is not necessarily the amount you are actually owed.
If you have been terminated because of a sale, the Toronto severance pay lawyers and Ottawa severance pay lawyers at Samfiru Tumarkin LLP can review the package before you sign.
For other workplace issues arising from a sale, contact our Ontario employment lawyers.
Business Sold Employee Rights Ontario: Frequently Asked Questions
What are my rights if my employer sells the business?
Your job does not automatically end because your employer sells the business. If your employment continues, Ontario law can protect your accumulated service. If your job ends, you are entitled to proper termination compensation. If the sale brings major unwanted changes to your job, constructive dismissal rights can also arise.
Do employees automatically transfer when a business is sold in Ontario?
Not in every type of sale. In a share sale, you remain employed by the same corporate employer. In an asset sale, the buyer is a different employer and existing employees do not automatically become its employees. If the purchaser hires you, the ESA’s continuity rules can protect your prior service.
Does my employer have to tell me before selling the business?
Ontario’s ESA does not create a general requirement to give employees advance notice merely because the business is being sold. If the transaction results in your employment being terminated, however, the employer must meet its termination notice or compensation obligations.
Can the new owner fire me after buying the company?
Yes, but a new owner does not get to ignore your termination rights. If the purchaser employs you and later terminates you, the ESA requires prior service to be included in length-of-employment calculations when the statutory continuity rules apply. You can also have greater common-law severance rights.
Can I refuse to work for the new owner?
Yes, but don’t reject a comparable employment offer before getting advice. You cannot be forced to accept a new employment relationship, but refusing suitable work can affect a claim for common-law wrongful dismissal damages because dismissed employees have a duty to mitigate their losses.
Does my seniority reset when the business is sold?
Not for ESA purposes when Ontario’s sale-of-business continuity rules apply. The purchaser must count your employment with the seller when later calculating ESA rights based on your length or period of employment.
Is selling a business the same as closing it?
No. A sale can result in employees continuing to work under the same company or for a purchaser. A business closure normally means the jobs themselves are ending, which puts termination and severance rights at the centre of the issue.
If your employer sells the business, the sale itself does not erase your employment rights. The important questions are whether your employment continues, whether your years of service are protected, whether your terms are changing and whether you are being offered the full compensation owed if your job ends.
Before you resign, reject the buyer’s offer, sign a new contract or accept a severance package, find out exactly what the sale means for you.