What happens when ambiguous facts get resolved via summary judgment and then appealed? One gets decisions like Ariss v. NORR Limited Architects & Engineers, 2019 ONCA 449, which unfortunately add more confusion to the law of termination than clarity.
Can an employee extinguish his statutory right to severance pay by way of a full and final release signed in the context of a share sale?
According to a 2018 decision of the Court of Appeal for Ontario, Kerzner v. American Iron & Metal Company Inc., 2018 ONCA 989 (CanLII), the answer to that question is a resounding “no.”
The case has real implications for those who practice employment law in the context of the sale of a business.
What happens in an asset sale transaction, if the purchaser / new employer neglects to give actual notice to an employee of the vendor, whom the purchaser intends to employ, that the employee will not be credited for his past years of service with the former employer/vendor once he becomes an employee of the purchaser?
According to a 2018 decision of the Ontario Superior Court of Justice sitting at Ottawa, Ariss v. NORR Limited Architects & Engineers, 2018 ONSC 620 (CanLII), the answer is:
In the absence of notice from new employer/purchaser that an employee will not be credited for his years of service with former employer/vendor, recognition of that service is deemed to be part of employee’s contract of employment with purchaser – regardless of any letter of termination actually received by the employee from the vendor.
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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.
Taking on the employees of another business can create unexpected financial obligations for employers. For example, this blog has previously looked at cases of employers being found responsible for an employee's past year of service when that employer takes over or otherwise acquires a business, see Two Employers Under One Umbrella Both Get Soaked by Judge.
Those cases beg the question: When will an employer not be deemed responsible for an employee's past years of service with another company? While the answer to that question is simple - when the two companies are wholly unrelated to one another - as the case of Paul Amaral v Verona Floors Inc., 2016 ONSC 5763 (CanLII) demonstrates, sometimes knowing when two companies are unrelated is a complicated question.
What are the tax implications of including a non-competition clause in an agreement for the sale of a business? Guest author Chad Saikaley, CPA, CA of the Ottawa accounting firm Ginsberg Gluzman Fage & Levitz, LLP , looks at those implications from an accountant’s perspective.
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”What are we doing about the employees?” That is the all-too-familiar question asked in the purchase and sale of a business. Are all the employees fired on closing? What happens if they continue working for the purchaser? Who is responsible for paying them severance?
In fact, there are a lot of questions concerning employees in the context of a purchase and sale of a business; presuming that the business has employees.
The purpose of this post is to look at some of the issues and legal implications involved in selling or buying a business, which is also an employer.
For many, the prospect of retirement is a welcome thought. Perhaps you will finally have more time to spend with your spouse, children, or grandchildren. For others, retirement is an opportunity to catch up on golf, travelling, or just plain doing nothing.
For many business owners, including professionals such as doctors, lawyers, and accountants, the means by which to finance such a retirement have often come by way of a sale of one’s business or practice. A book of business can have incredible value to a willing purchaser and certainly our firm has helped several professionals successfully sell their business.
While my colleagues in Kelly Santini LLP's business law group would be more than happy to be of service to you with respects to the legalities of such a sale, the purpose of this post is to consider the employment law considerations of selling a business; because, in addition to being a successful business owner and professional, most such individuals are also employers.
Something that most business owners fail to appreciate is that, while, for all the years that one’s loyal staff has been an asset, for potential purchasers, long-service employees can be an costly liability.
This post will look at:
