Am I on the hook for vacation pay that accrued but was never paid out by the seller?

It depends on your deal structure. In a share purchase, yes — accrued and unpaid vacation pay is a debt the corporation owes its employees, and since the same corporation continues under your ownership, that debt continues with it, regardless of when it built up.

In an asset purchase, this liability generally stays with the selling corporation as the employer during the period the vacation pay accrued, provided your purchase agreement makes clear you aren't assuming pre-closing wage liabilities. It gets more layered for employees you continue to employ under going-concern continuity: their accrued vacation entitlement, as a statutory concept tied to length of service, continues to be calculated using their combined service with the seller and with you going forward, even though the specific unpaid amount that built up before closing should, in a well-drafted deal, remain the seller's obligation to settle rather than yours to absorb.

Get an accurate accounting of accrued, unpaid vacation pay as part of financial and employee due diligence, and make sure your purchase agreement clearly separates the going-forward entitlement calculation from responsibility for the pre-closing debt itself. A Treadstone business lawyer can help draft this distinction clearly.