27 Apr Continuity of Employment
Continuity of Employment is an Employment Standards Act (ESA) provision that ensures that an employee’s past employment is recognized in the event that the business they work for is sold to a new owner and the employee continues to work for the business under this new ownership.
The ESA’s continuity provisions also apply to an employee of a building services provider that “no longer holds the contract at the building where the employee works and the employee is hired to work for the new provider at the same location.”
A building services provider is a company that provides food services, cleaning or security for a premises. It may also provide a parking garage, property management, or concession stand services related to a premises and those on it.
Why does Continuity of Employment matter?
Most employees are entitled to various leaves of absence, notice of termination and severance pay. However, most of these benefits are accessible only after they have worked a certain period of time with an employer. What’s more, the scope of these benefits is often related to the employee’s length of service with their employer.
Continuity provisions ensure that these benefits are not re-set in the event that a business or building services provider changes hands of ownership but an employee continues their work with the new owner. Because of these provisions, the change of business ownership does not constitute the end of employment and beginning of another for ongoing employees. Continuity provisions ensure that employment and its accrued benefits are transferred along with the sale of a business or building services provider so that an employee is credited for the length of their past service.
The below examples may offer some clarification.
Example 1
Joy has worked for a local convenience shop for the past seven years. Then, one day the shop is sold so original owner can retire. The new shop owner is willing to keep Joy on as an employee and Joy wishes to keep working for the shop under the new ownership. Then, two years after the business’s transfer Joy’s employment is terminated due to the need to downsize. Upon termination, Joy will be entitled to eight weeks’ notice – recognizing her seven years of employment with the shop’s first own and her two years of employment with its subsequent owner, not just two weeks notice for her two years with the new owner.
Example 2
Amal has worked for Squeaky Kleen as a cleaner for three years. Squeaky Kleen has a contract with a downtown stadium to provide cleaning services for the premises. After two years’ employment with Squeaky Kleen, the company’s contract with the stadium is complete and the stadium decides to pursue a new contract with the cleaning company Scrub-a-Dub. Scrub-a-Dub hires Amal and she continues to work as a cleaner at the stadium. In this case, continuity provisions would be applied and Amal’s employment benefits, such as vacation time a notice entitlements, would continue to accrue.
The 13-Week Exception
Continuity provisions do not apply if there is a pause of more than 13 weeks of employment between the time employment with one employer ends and the employment the new employer begins.
For example, if Susu has worked for a restaurant for seven years and then that restaurant is sold to a new owner and this new owner wants to do more of the work herself and chooses not to hire Susu, Susu’s employment will have ended. However, if, 18 weeks later, the new owner realizes she needs more staff and decides to hire Susu, Susu will not be entitled to continuity of employment provisions and she will be starting fresh in terms of her entitlements as an employee of the new restaurant owner.
The employment law team at KCY at LAW can help both employers and employees navigate issues concerning continuity of employment and all other matters concerning the workplace relationship between employers and employees. Call us at 905-639-0999 or click here to book your consultation.