Am I on the hook for termination pay if I decide not to keep an employee after closing?

It depends on when and how you make that decision. If you're doing an asset purchase and simply choose not to hire someone at all, that person is being let go by the seller at closing, and the seller — not you — generally bears the termination and severance cost, since you were never their employer.

If you do hire the employee, even briefly, and then decide afterward not to keep them, the calculus changes: you're now the one ending their employment, and because continuity of service under the Employment Standards Act generally applies to someone hired as part of a going-concern sale, their combined service with the seller and with you is what any notice or termination pay obligation gets calculated against — not just your own short period of ownership. In a share purchase, this is even more direct, since you're simply the continuing employer and any termination you carry out is treated the same as if the previous owner had done it.

Decide deliberately, before closing, who you actually intend to keep, and understand that "trying someone out" briefly after a going-concern purchase still exposes you to their full accumulated service if it doesn't work out. A Treadstone business lawyer can help you plan staffing decisions with this in mind.