Selling a Business in British Columbia: What Happens to Employees?
When a business is sold in British Columbia, both employers and employees often have urgent questions about job security, notice, and severance. Employees want to know whether they will lose their jobs or be compensated. Employers need to understand their legal obligations and potential liabilities.
The answers depend largely on how the business is sold and what happens to employees afterward.
This article explains:
- What happens to employees when a business is sold in BC
- Employee notice and severance entitlements
- How length of service is treated
- How BC rules differ from Ontario
📍 Not in BC?
If you’re an employee or employer in Ontario, the law works differently. See our Ontario-specific article about Notice Period and Selling a Business.
When a Business Is Sold, What Happens to the Employees in BC?
In British Columbia, employees are not automatically terminated simply because a business is sold. However, their rights and entitlements depend on the structure of the transaction and whether they continue working for the purchaser.
As in Ontario, there are two main types of sales:
- Share sales
- Asset sales
But the legal consequences in BC are not identical.
Share Sale vs. Asset Sale in British Columbia
Share Sale
In a share sale, the purchaser buys the shares of the corporation that owns the business. The legal employer does not change.
Key impacts in BC:
- Employees remain employed by the same legal entity
- Employment continues uninterrupted
- Length of service is preserved
- No termination or severance is triggered solely by the sale
From an employment law perspective, most share sales in BC have little to no immediate impact on employees.
Asset Sale
In an asset sale, the purchaser buys the business assets, not the corporation. This creates more complex employment issues.
Under BC law:
- The seller and purchaser are different legal employers
- Employees may be terminated by the seller
- The purchaser may offer new employment to some or all employees
However, unlike Ontario, BC law strongly emphasizes continuity of employment when employees continue working after a sale.
As Christopher Achkar, employment lawyer and founder of Achkar Law, explains:
“When a business changes hands, employee rights don’t simply disappear. Employers and employees alike should consult a lawyer to understand obligations, notice periods, and severance entitlements before making decisions.”
Employee Entitlements on the Sale of a Business in BC
BC Employment Standards Act (ESA)
Section 97 of the BC Employment Standards Act is critical.
If:
- All or part of a business is sold, and
- An employee continues working for the purchaser
Then the ESA treats employment as continuous for statutory purposes.
This means the purchaser must recognize the employee’s prior service for:
- Termination notice or pay in lieu
- Severance entitlements
- Vacation entitlements
Even if the seller technically “terminates” the employee at closing, ESA continuity usually applies if the employee is rehired.
How Much Notice Are Employees Entitled to in BC?
ESA Minimum Notice
Under the BC ESA, employees are entitled to:
- 1 week’s notice after 3 months of service
- Up to 8 weeks’ notice after 8 years of service
When employment is treated as continuous under section 97, prior service with the seller counts.
Common Law Reasonable Notice in BC
BC courts also recognize common law reasonable notice, which may exceed ESA minimums unless the employment contract validly limits notice.
Courts consider:
- Age
- Length of service (often including pre-sale service)
- Position and responsibilities
- Compensation
- Availability of similar employment
Importantly, BC courts are more likely than Ontario courts to credit prior service following an asset sale where:
- Employment continues seamlessly
- The employee’s role remains substantially the same
- The purchaser benefits from the employee’s experience
This makes severance exposure in BC asset sales potentially significant.
What Are My Rights If My Employer Sells the Business in BC?
If you are an employee in BC and your employer sells the business:
- You may continue working without interruption
- Your length of service may carry over automatically
- You may be entitled to notice or severance if terminated
- You cannot be penalized for refusing unreasonable changes
Employees should exercise caution when signing new employment agreements, as these may attempt to reset service or limit notice rights.
What Employers in BC Need to Know
For employers, BC’s continuity rules create both obligations and risks.
Key considerations include:
- Recognizing prior service under the ESA
- Managing common law notice exposure
- Structuring employment offers carefully
- Allocating termination liabilities in purchase agreements
- Avoiding inadvertent terminations
Failure to account for continuity can result in unexpected severance liability.
How an Employment Lawyer Can Help
For employers
- Assess ESA and common law exposure
- Draft compliant employment offers post-sale
- Allocate liability in purchase agreements
- Reduce wrongful dismissal risk
For employees
- Review termination or re-employment offers
- Assess severance and notice entitlements
- Negotiate compensation
- Protect continuity of service
In Summary
- Share sales usually do not affect employment in BC
- Asset sales often involve continuity of employment
- BC ESA requires recognition of prior service in most cases
- Common law notice may significantly exceed ESA minimums
- Each sale must be assessed based on its specific facts
Contact Achar Law
Selling a business in British Columbia raises complex employment issues that require careful planning on both sides.
Achkar Law regularly advises employers and employees on business sales, notice obligations, and severance entitlements under BC law.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation. ©