- In a share purchase, the buyer acquires the shares of the corporation that employs the staff.
- Because most people talk about "the company being sold" without distinguishing share deals from asset deals, the language of continuity tends to get applied loosely to both.
- Terms, salary, vacation entitlement, and any written notice provisions carry forward unchanged.
People often describe employees as having "deemed continuous employment" whenever a company changes hands — but that phrase, strictly speaking, describes something specific: a statutory rule under the Employment Standards Act, 2000 that applies to asset sales. On a share purchase, something simpler and arguably more reassuring is actually happening, and it's worth understanding the difference precisely rather than assuming the two structures work the same way.
If you're an employee wondering what a share sale means for your job, or a buyer or seller trying to explain it accurately to staff, this distinction matters more than it might seem.
The Key Point: In a Share Purchase, Nothing Is "Deemed" — It's Automatic
In a share purchase, the buyer acquires the shares of the corporation that employs the staff. The corporation itself — the actual legal employer — does not change at all. It's the same entity, with the same name, the same registration, and the same obligations, before and after closing. Only its shareholders are different.
Because the employer never changes, there is no statutory "deeming" mechanism needed to bridge a gap in employment — there is no gap. The employment relationship simply continues, uninterrupted, exactly as it was the day before closing.
This is different from an asset purchase, where the buyer is a separate legal entity from the seller. There, the Employment Standards Act, 2000 does step in with a specific rule: where a business is sold as a going concern and the purchaser hires the seller's employees, the employee's prior service is deemed to count as service with the purchaser for ESA purposes, even though the employer has genuinely changed. That is the real "deemed continuity" mechanism — and it exists precisely because, in an asset deal, continuity would not otherwise be automatic.
Why the Confusion Happens
Because most people talk about "the company being sold" without distinguishing share deals from asset deals, the language of continuity tends to get applied loosely to both. In practice:
- Share purchase: continuity is automatic, because the employer legally never changed.
- Asset purchase: continuity is a statutory fiction — the ESA treats service as continuous even though, legally, a new employer has taken over — and it comes with real limits (it doesn't apply if the purchaser hires the employee more than a defined window after the employee's last day with the seller or the sale date, whichever comes first).
Getting this backwards matters. A seller in a share deal telling employees their service will be "deemed continuous" is technically describing the wrong mechanism — there's nothing to deem, because nothing changed. And a buyer in an asset deal assuming continuity is automatic, the way it is in a share deal, may be missing the ESA conditions that actually have to be satisfied for it to apply.
What Actually Stays the Same in a Share Purchase
- The employment contract itself. Terms, salary, vacation entitlement, and any written notice provisions carry forward unchanged.
- Accrued service and seniority. Since it's the same employer throughout, there is no calculation needed — service simply continues counting as it always did.
- Benefit plans and enrolments, to the extent they are tied to the corporation rather than to the previous shareholders personally.
- Any existing restrictive covenants or other employment terms, exactly as previously written.
What Does Change
- Who owns the corporation — the shareholders behind the scenes.
- Potentially, management and strategic direction, depending on what the new owners intend.
- Possibly, day-to-day reporting lines or company culture, though none of that flows from any change in the legal employment relationship itself.
A Quick Comparison
| Share Purchase | Asset Purchase | |
|---|---|---|
| Does the legal employer change? | No | Yes |
| Is continuity "deemed" by statute? | Not applicable — never interrupted | Yes, under ESA s. 9, subject to conditions |
| Does the existing contract stay in force automatically? | Yes | Only if the buyer offers new terms consistent with continuity |
| Is there a time limit on preserving continuity? | Not applicable | Yes — continuity does not apply if hired too long after the employee's last day or the sale |
Frequently asked questions
If my employer is sold as a share deal, do I need to sign anything new?
Generally no. Because the employer hasn't legally changed, your existing employment contract continues to apply on its existing terms unless you and the corporation agree in writing to change something.
Can the new owners change my job after a share purchase?
They can propose changes the same way any employer could — through negotiation and agreement, or by offering new terms. A share sale on its own doesn't give an employer a special right to unilaterally alter contract terms just because ownership changed.
Is "deemed continuous employment" the right phrase to use for a share sale at all?
Not technically — that specific statutory language applies to how the ESA treats continuity in an asset sale. For a share sale, it's more accurate to say employment simply continues, because the employer was never actually interrupted.
Does this distinction matter for calculating notice or severance later?
It can. Understanding whether continuity was automatic (share deal) or a statutory bridge with its own conditions (asset deal) matters if a dispute ever arises about how much service actually counts — this is exactly the kind of detail worth confirming with a lawyer rather than assuming.
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