THE QUESTION
My company’s store location was purchased by a new owner and all the staff were laid off and received full severance pay. However, I accepted a position at a new location and took it to avoid being laid off (but I never signed any paperwork regarding my move). Now, I’m commuting four hours each day to get to this location and I’m also not getting supervisor shifts (which have a much higher wage). So I’m earning less and spending more time travelling. I want to leave the company and get severance. Would I still qualify for it under any circumstances?
THE FIRST ANSWER
Menachem Freedman, lawyer, HHBG Lawyers – Employment Justice, Vancouver
Your question engages two common employment law issues:
- What happens to a worker’s job when their employer sells the business; and
- When can an employee get severance without being fired.
In terms of the first question, the answer changes drastically based on something you have no control over and may not be aware of: how the sale of the business was done.
If the original business sold the shares of the company to the new owner, then from the perspective of the worker, nothing has changed and the new owner owes you the same obligations as the old owner.
If the original business only sold its assets to the new owner (such as a factory selling its building and its equipment), then the original business has effectively terminated your employment because you are not an asset that can be sold without consent. In that case, the original business owes you severance. The new owner may or may not decide to hire you, and may or may not give you the same conditions.
In terms of the second question, you are only owed severance if you are fired or constructively dismissed. Constructive dismissal is one of the trickiest and most misunderstood legal issues, and you should always get legal advice before claiming it. It occurs when an employer unilaterally makes a big change in the worker’s employment conditions. Constructive dismissal claims need to be raised pretty quickly, otherwise, the court could decide that the worker accepted or acquiesced to the change.
In this case, a lot depends on the circumstances, but you probably aren’t owed severance. If the sale was an asset sale, the original owner did owe you severance, but this will be net of the new income you made with the new owner. If it was a share sale, then a court would likely find that you accepted the changes to your working conditions if you worked under them for eight months without complaining.
THE SECOND ANSWER
Shibil Siddiqi, employment and human rights lawyer, Progressive Barristers, Toronto
Employee rights following the sale of a business are complex and depend on the nature of the sale. Based on your description – where all staff were terminated and received severance – it is likely that this was an asset sale involving a change in employer identity.
The key legal questions in your case are: (1) Do you have a constructive dismissal claim? (2) If so, should you pursue it against your former or current employer?
Constructive dismissal occurs when an employer fundamentally breaches an employment agreement. This can include a substantial change in the location of work, a significant reduction in pay or a loss of responsibilities (such as losing supervisor shifts). A constructively dismissed employee can resign but still seek compensation from the employer as if they were terminated.
A key factor is whether an employee voluntarily agreed to these changes. Even if you initially accepted them, courts sometimes allow employees to assess a new arrangement before asserting constructive dismissal. Your four-hour commute and reduced wages may support such a claim.
In Ontario, under the Employment Standards Act (ESA), if an employee continues working for the purchaser of a business, their employment is deemed continuous. This means that if you can establish constructive dismissal, you may be entitled to termination pay, vacation pay and severance pay (if applicable) based on your total service with your former and current employer.
The common law position differs. When a business is sold, employment is presumed to be terminated. This means the original employer typically owes notice pay. In many cases, common law notice pay exceeds ESA minimums.
If your former employer no longer exists or cannot pay severance, you may still be entitled to common law damages from your new employer based on your total service, but only if the business was purchased as a going concern (meaning it continued operations without major interruptions), and your employment terms remained largely the same.
Given these factors, you may have legal options available to you. However, this is a legally complex and fact-specific situation, with significant risks. Before making any decisions, you should seek expert legal advice to assess the strength of your claim and determine the best course of action.
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