What Happens in a Buy/Sell Deal if One of the Vendor’s Employees Refuses to Accept the Purchaser’s Offer of Employment?

(c) istock/BernardaSv

A typical term of any significant asset purchase agreement, which sees the employees of the vendor continue in employment with the purchaser, is that the purchaser will make offers of employment on substantially similar terms to the vendor’s employees. As is more fully explained in my post Continuity of Employment Following the Sale of a Business, pursuant to the provisions of Part IV of the Ontario Employment Standards Act, 2000:

If an employer sells a business or a part of a business and the purchaser employs an employee of the seller, the employment of the employee shall be deemed not to have been terminated or severed for the purposes of this Act and his or her employment with the seller shall be deemed to have been employment with the purchaser for the purpose of any subsequent calculation of the employee’s length or period of employment.

But what if one (or more) of the employees (unreasonably) refuses the purchaser’s offer? Is that employee still entitled to ‘severance’ pay? The answer will surprise most employers.

Judge Orders NFU-O Accredited as GFO

In a decision released October 16, 2013, the Ontario Superior Court of Justice, under the pen of the Honourable Mr. Justice Robert N. Beaudoin, ordered the Ontario Agriculture, Food and Rural Affairs Appeal Tribunal to accredit the National Farmers Union - Ontario as a 'general farm organization' pursuant to the provisions of the Farm Registration and Farm Organizations Funding Act, 1993, S.O. 1993 c. 21. The full text of the decision can be found here: National Farmers Union - Ontario v. Ontario (Agriculture, Food and Rural Affairs Appeal Tribunal), 2013 ONSC 6452.

For those wondering why an employment law blog would consider such a case, there are two reasons: First, yours truly represented the National Farmers Union - Ontario; and second, the court's decision was based on judicial review. Judicial review is commonly used as a check on the decisions made by administrative tribunals such as the Human Rights Tribunal of Ontario (HRTO), the Workplace Safety and Insurance Appeals Tribunal (WSIAT), and the Ontario Labour Relations Board (OLRB), amongst many others. Indeed some of the precedents relied upon by the court were labour and employment cases and the court's decision in this case could be equally applicable in future judicial reviews of labour and employment cases.