- When all or part of a business is sold, an employee's employment is deemed continuous and uninterrupted by the sale under section 97 of the Employment Standards Act.
- If the new owner ends your employment later, compensation for length of service is counted from your original hire date.
- There are exceptions, including an employee who declines the new owner's offer, and a trustee's sale in a bankruptcy.
If the business you work for is sold, it is natural to wonder whether your years with the old owner still count. Those years can affect how much notice or pay you are owed if your job ends later.
In British Columbia, the Employment Standards Act deals with this directly. This article explains the general rule, what it means for compensation, wages and vacation pay, and the situations where the rule works differently.
This article covers the law of British Columbia.
The basic rule: your employment is treated as continuous
Section 97 of the Employment Standards Act says that if all or part of a business is disposed of, the employment of an employee is deemed continuous and uninterrupted by the disposition. The same applies if the business continues under a receiver or receiver-manager.
In practice, the purchaser takes on the employer role and must honour your length of service with the seller. You do not start again at zero.
What this means for compensation for length of service
If the purchaser ends your employment after the sale, compensation for length of service is counted from your original hire date. The Act sets the amounts under section 63, shown below.
| Length of service | Compensation |
|---|---|
| 3 consecutive months | 1 week's wages |
| 12 months | 2 weeks' wages |
| 3 years | 3 weeks' wages, plus 1 more week for each additional year, to a maximum of 8 weeks |
This compensation can be met by written notice, by pay in lieu of notice, or by a combination of the two.
Wages and vacation pay
When employment continues through a sale, the purchaser pays outstanding wages, including wages that were due before the sale. The purchaser also assumes accrued vacation pay, which is payable when you next take vacation.
If your employment ends before the sale, the seller pays all outstanding wages and compensation.
Exceptions and special situations
- If you decline the purchaser's offer and the conditions are not substantially changed, you are deemed to have quit, and no notice or compensation is owed.
- If the purchaser's changes are substantial and adverse, the director may treat it as a termination under section 66, and the purchaser would pay compensation.
- In a bankruptcy, a trustee's sale can end employees' rights under the Act, and the purchaser is not liable for wages owed before the bankruptcy.
- In a receivership, employment is also deemed continuous.
- In a share sale, the employer corporation does not change, so your employment generally continues with the same employer. The Branch guidance does not specifically address share sales, so the facts matter.
What to do next
- Keep your hire date, pay records and any employment contract or offer letter.
- Read any offer from the new owner carefully before accepting or declining it, and compare the terms with your current job.
- Ask in writing how your service, wages and accrued vacation will be treated.
- Do not assume that declining an offer preserves a right to compensation; check first.
- If you are unsure how your situation fits, speak to a lawyer or contact the Employment Standards Branch.
Frequently asked questions
Does my length of service start over when the business is sold?
Generally no. Under section 97 of the Employment Standards Act, your employment is deemed continuous and uninterrupted by the sale. The purchaser must honour your length of service with the seller.
Who pays my vacation pay after a sale?
Where employment continues, the purchaser assumes accrued vacation pay, payable when you next take vacation. If your employment ended before the sale, the seller pays outstanding wages and compensation.
What if I refuse the new owner's job offer?
If the conditions are not substantially changed, you are deemed to have quit, and no notice or compensation is owed. If the changes are substantial and adverse, the director may treat it as a termination, and the purchaser would pay compensation.
Does this apply if the owner sells shares instead of assets?
In a share sale the employer corporation does not change, so employment generally continues with the same employer. The Employment Standards Branch guidance on section 97 does not specifically address share sales, so it is worth confirming your situation with a lawyer.
Sources
- Employment Standards Act, RSBC 1996, c. 113 — bclaws.gov.bc.ca
- BC Employment Standards Branch – Interpretation Guidelines, s. 97 — www2.gov.bc.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a buying & selling a business question
Buying or selling a business with us is from $3,358.88, tax included. Third-party fees are extra.