Employee Years of Service in a British Columbia Business Sale

If you are buying a business, you may wonder what you take on with the staff. If you are an employee, you may wonder whether the years you have put in vanish the day the owner changes. In British Columbia, the Employment Standards Act answers much of this.

This article explains section 97 in plain terms, what it means for notice, pay and vacation, and where the rule has limits. It also flags that other rights can exist outside the Act.

This article covers the law of British Columbia.

What section 97 says

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 the employee's length of service with the seller. A sale is not a fresh start for the employee's service record.

What carries over: service, wages and vacation

Length of service matters most when a job ends. Compensation for length of service is 1 week's wages after 3 consecutive months, 2 weeks after 12 months, and 3 weeks after 3 years plus 1 more week per additional year, to a maximum of 8 weeks. It can be met by written notice, by pay in lieu, or by a combination of the two.

If the purchaser ends the employment after the sale, that compensation is counted from the original hire date. Wages and vacation are handled as follows.

• The purchaser pays outstanding wages, including wages that were due before the sale.
• The purchaser assumes accrued vacation pay, payable when the employee next takes vacation.
• If employment ends before the sale, the seller pays all outstanding wages and compensation.

Exceptions and limits

Several situations work differently from the general rule.

• If an employee declines the purchaser's offer and the conditions are not substantially changed, the employee is 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 the 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.

Share sales and common law continuity of service

Section 97 covers a disposal of a business by any method, but the guidance does not specifically address share sales. How the Act applies to a share sale depends on the facts, so it is worth confirming with a lawyer.

The Act is not the only source of employee rights. An employment contract and the common law may also matter, and they can deal with service and reasonable notice differently from the Act's minimums. How they apply depends on the person's job, contract and history, so it is worth getting legal advice rather than assuming the Act's figures are the whole picture.

For buyers, that means the price should reflect the real cost of the workforce, including service that already exists. For employees, it means your years with the previous owner may still count.

What to do next

• Buyers: ask the seller for a list of employees with hire dates, wages, accrued vacation and contract terms.
• Buyers: build the cost of existing service into the price and ask for protection in the sale agreement.
• Employees: keep your offer letters, pay stubs and any written contract.
• Employees: if you are offered new terms, compare them with your old ones before you decline, because declining can mean you are deemed to have quit.
• Everyone: if the sale is a share sale, a bankruptcy or a receivership, confirm how the rules apply.

A lawyer can review the contracts and sale terms and tell you how both the Act and the common law apply to your facts.

Frequently asked questions