Area of Law: Employment Law
Answer # 592
What happens to employees if a business is sold?Region: Ontario Answer # 592
If a business is sold to a new owner there are rules that the new owner must follow regarding the existing employees. Generally, an employee should not lose any rights or money because the business was sold.
Employee rights under new owner
If the employee keeps their job, usually the employee is entitled to maintain their seniority with respect to all the benefits and rights that they enjoyed before the sale of the business.
Employee rights if fired or constructively dismissed by new owner
If the employee is fired or constructively dismissed, the new employer will be responsible for giving the employee notice or pay instead of notice. Constructive dismissal means a fundamental change whereby the new employer took away some of the employee’s significant benefits and materially reduced their pay, or demoted them. In some cases, the employer may also be responsible for giving the employee severance pay.
If you work for a business that is sold, and you lose your job without proper notice or pay, or if you lose any rights or pay, it may be considered wrongful dismissal, and you may be able to sue both the former and the new employer. For more information, visit the Ministry of Labour, Training and Skills Development website.
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