When a company changes hands, employees often worry their hard‑earned seniority and benefits will vanish overnight. In British Columbia, the Employment Standards Act (ESA) offers strong continuity protections that survive the sale of a business. Whether you’re an owner planning to sell, a buyer eyeing an acquisition, or a worker caught in the middle, understanding how Sections 63–65 and 97 of the ESA apply can help you avoid costly missteps—and safeguard employee rights. The discussion below breaks down termination rules before and after a sale, how liabilities shift between old and new owners, and whether fresh employment contracts are required.
Continuity of employment when a business is sold
Section 97 of the ESA states that if a business “is sold, leased, transferred or otherwise disposed of,” employees are deemed to have continuous service with the purchaser. Their start date, length of service, and accumulated entitlements (vacation, statutory‐holiday pay, termination notice, etc.) carry forward unchanged. In practical terms, selling the company does not reset an employee’s clock.
Termination before the sale
If the seller terminates staff in advance of closing, the usual ESA notice or pay‑in‑lieu rules under ss. 63–65 apply. Length‑of‑service determines notice: e.g., one week after 3 months, two weeks after 12 months, up to eight weeks after eight years. Because continuity is broken by the termination itself, the seller—not the purchaser—bears severance liability. Courts have also awarded common‑law reasonable notice, often far exceeding ESA minimums, when the termination is tied to an impending sale.
Termination after the sale
Once the buyer takes over, any lay‑offs or dismissals are treated as if the employees had always worked for the new owner, per s. 97(3). That means notice or severance must be calculated on total cumulative service, not just time with the purchaser. A buyer can inherit substantial liability if it cuts staff shortly after closing—an important due‑diligence point for M&A counsel.
Agreements between buyer and seller
Section 97(4) permits the buyer and seller to agree, between themselves, who will absorb ESA liabilities, but that private agreement cannot reduce employees’ rights. If the contract allocates termination costs to the vendor yet the purchaser fires someone, the employee can still pursue the purchaser; it will then seek indemnity from the vendor.
Do you need a new employment contract?
Legally, no new agreement is required because employment is deemed continuous. Practically, many buyers issue updated offer letters to clarify reporting lines, compensation tweaks, or new workplace policies. To be enforceable, any material change—e.g., lower bonus potential or new non‑compete—must be supported by fresh consideration (a raise, signing bonus, etc.). Without consideration, the amendment may be void, and the original terms remain. Advise clients to draft “confirmation of employment” letters that preserve start dates and explicitly state that prior service counts toward all ESA entitlements.
A business sale may feel like hitting the reset button, but for employment purposes it is anything but. Section 97 locks in employees’ length of service, while Sections 63–65 ensure statutory notice or pay‑in‑lieu still tracks total time worked—regardless of who owns the shares or assets on closing day. Sellers should budget for potential termination costs before the deal completes, and buyers must factor inherited ESA liabilities into their due‑diligence checklist. If either party wants to overhaul employment terms, they must offer fresh consideration and secure clear, written consent. For tailored advice on navigating employee rights during a purchase or sale, contact Shona Thomas, Pax Law’s Employment Law counsel, who can help structure transactions—and contracts—in full compliance with British Columbia’s Employment Standards Act
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