02 Oct What should I expect when a new company purchases the company I currently work for?
Businesses are constantly being acquired by new companies, and as an employee, it could be overwhelming to experience changes to your workplace. You may not be sure whether your role could shift or be terminated with your new employer.
When a company decides to purchase another, there are generally two types of purchases that could be made: share purchase or an asset purchase.
When a company pursues a share purchase, that means they are purchasing shares of the old company. If the new company decides to purchase all the old company’s shares, they will be liable for the entire company (even their assets). In this case, buying all the shares will change the shareholders in the company, but will not change the employer. Employees can expect to continue their jobs as usual.
When a company purchases another’s assets, it means that they will buy aspects of the company like their building or inventory. The purchaser would then be liable for the assets they choose to purchase; however, other aspects of the company can remain with the seller.
When buying assets, there is a possibility that employees may be affected. Because employees cannot be bought or sold like assets of a company, their current employment relationship will be terminated. The new company may choose to offer employees a new job with a new employment contract or keep them terminated. It is not the legal responsibility of the new employer to continue any employment relationship from the previous employer.
If the new employer chooses to offer jobs to various employees, they will begin a new employment agreement and outline their new terms and conditions of their employment relationship. However, the years acquired at the company will be accounted for and not begin at the beginning of their new employment agreement. For example, if an employee who has worked 15 years for their previous employer and has just signed a new employment agreement with the purchaser, the 15 years of service will still be accounted for and will not re-start at year one. In legal terms, this rule is referred to as the continuity of employment to ensure that future termination pay, severance pay, termination notice etc. will be correctly provided to the employee.
The Employment Standards Act, 2000 (ESA) ensures that in the event of an asset purchase, the seller is still responsible to provide all minimum requirements involved in termination notice and severance pay. This compensation must still be equivalent to the individual employee’s years of service, age, position etc.
If your company has just been acquired and you need help understanding your rights and how to move forward, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today.