Can You Refuse the Buyer's Job Offer and Get Termination Pay in Alberta?

What happens to the staff when a business is sold by selling its assets depends on the situation, so it is worth confirming with a lawyer before you rely on any assumption. How your job is affected depends on the terms of your employment and on how the sale is set up, so it is worth confirming with a lawyer before you decide anything. You may receive an offer from the buyer while the seller is closing the business.

A common worry is whether saying no means you lose termination pay or severance. There is no simple yes or no. This article explains how to think it through and what to do before you answer.

This article covers the law of Alberta.

What an asset sale means for employees

In an asset sale, the buyer purchases selected parts of the business, such as equipment, inventory, contracts and the name, rather than the company itself. For federal tax purposes, the business-assets rule in section 167(1) of the Excise Tax Act applies where the buyer gets all or substantially all of the property that can reasonably be regarded as necessary to carry on the business. How your own employment is affected depends on your situation, so it is worth confirming with a lawyer.

A share sale is a different kind of deal, because the buyer takes the company itself instead of selected assets. Which type of sale you are dealing with matters, so ask which it is, and confirm with a lawyer what it means for your job.

Why your answer to the offer matters

Termination pay and severance depend on your employment contract, your length of service, the notice you are given, and Alberta employment law. Whether a buyer's offer affects those rights depends on factors such as:

• Whether the offer is for substantially the same job, pay, hours and location, or for worse terms.
• Whether your years of service with the seller would be recognized by the buyer.
• Whether the seller gives proper written notice or pay instead.
• What your written contract, handbook or any past promises say.

Terms that are materially worse may be treated differently from an offer on similar terms. A lawyer or the provincial employment standards office can tell you how the rules apply to your facts, so ask before you reject or accept.

Questions to ask before you answer

• Who exactly is the new employer, and is it a different legal entity from the seller?
• Will my start date, seniority, vacation and benefits carry over?
• Are pay, hours, duties, and work location the same? What exactly changes?
• Has the seller said in writing whether I will get notice, or pay, if I do not accept?
• How long do I have to respond?

Ask for answers in writing. Verbal assurances are hard to prove later.

To check who the buyer's company is, a Corporate Registry search through a registry agent can show registration date, owners, directors and legal addresses.

Signing documents

Be careful with anything you are asked to sign, such as a release, a resignation, or a new employment agreement. Signing may affect rights you would otherwise have. It is reasonable to ask for time to have it reviewed.

If you accept the offer, ask what happens to your service with the seller. If you refuse it, ask the seller to confirm in writing how your employment will end and what you will be paid.

What to do next

• Collect your employment contract, pay stubs, handbook, and any letters or emails about the sale.
• Save the buyer's offer and compare it line by line with your current terms.
• Ask the seller and the buyer your questions in writing.
• Do not sign a release or resign before getting advice.
• Speak to an employment lawyer or the provincial employment standards office about your situation and timelines.

Frequently asked questions