The Company I Work For Was Sold. Does My Severance Reset?
When your employer is sold, your years of service usually do not vanish. The ESA carries them over, and even at common law your prior service still counts toward severance.
Key takeaways
- A sale of the business does not automatically wipe out your years of service.
- Under ESA section 9, if the buyer keeps you on, your employment is treated as continuous.
- Even at common law, courts recognize your prior service and experience in setting notice.
- Being asked to sign on as a "new employee" is a common tactic to reset your service. Be careful.
- If you are let go after a sale, your severance should reflect your total service, not just time with the new owner.
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When a business changes hands, employees often worry that their years of loyalty just evaporated, and new owners sometimes encourage that impression. In Ontario, it is usually not true. Both the Employment Standards Act and the common law are designed to stop a sale from quietly erasing the service you built up, and that service can be worth a great deal if you are later let go.
✅Quick answer. A sale of the business generally does not reset your severance. Under section 9 of the ESA, if the buyer continues to employ you, your employment is deemed continuous and your service with the old owner counts. At common law, courts also credit your prior service and experience when setting reasonable notice. If you are dismissed after a sale, your severance should reflect your total years, not just your time with the new owner.
Does a sale reset your years of service?
Usually not. The whole point of the rules in this area is that the identity of the owner can change while the employment relationship, for practical purposes, continues. You are doing the same job, often in the same place, for the business that carries on. The law does not let a change of ownership on paper be used to strip away the entitlements you earned over years of work.
The ESA rule: section 9
Section 9 of the ESA provides that when an employer sells a business and the purchaser employs an employee of the seller, the employment is deemed not to have been terminated or severed, and the employee's length of service is treated as continuous. In practical terms, your years with the old owner carry straight over for ESA purposes like notice and severance pay. There is a narrow exception where the gap between the two employments is longer than 13 weeks, but a normal, seamless transition keeps your clock running.
What about common law severance?
Your common law entitlement, which is usually the larger number, also looks past the sale. Courts recognize that the experience and service you bring from the predecessor business have real value to the new owner. In Antchipalovskaia v. Guestlogix Inc. (2022 ONCA 454), the Court of Appeal factored in the value of the employee's prior years of experience and training, which the successor got the benefit of without new onboarding, in setting a 7-month notice period. And in Manthadi v. ASCO Manufacturing (2023 ONSC 3499), an employee in her 60s with roughly 36 years of service to the predecessor business was awarded 12 months. The prior service is not ignored just because the letterhead changed.
The "sign on as a new employee" trap
A common move by a buyer is to ask you to sign a fresh contract as though you were a brand-new hire, sometimes with a termination clause that limits you to the minimum. This is often an attempt to reset your service to zero. Courts look past the label at the substance of the relationship. In Chin v. Beauty Express Canada Inc. (2022 ONSC 6178), an esthetician's roughly 20 years of total service, including years with the predecessor salon, were recognized, and in Mazanek v. Bill & Son Towing (2021 ONSC 4512), a tow operator's prior years with the predecessor contractor at the same location were treated as adding to his entitlement. Before you sign anything a new owner puts in front of you, it is worth having it reviewed, since a poorly explained new contract can cost you years of credit.
What can you claim if you are let go after a sale?
Your severance should be based on your total length of service, not just the months or years since the sale. For a long-service employee, the difference between counting from the sale and counting from your original start date can be enormous. This is exactly the kind of situation where a proper review, rather than accepting the new owner's framing, changes the number dramatically.
What should you do around a sale of the business?
- 1.Keep records of your original start date and your full service history, including with the predecessor.
- 2.Do not sign a new contract from the buyer without understanding whether it resets your service or caps your severance.
- 3.If you are dismissed after a sale, do not accept a severance figure based only on your time with the new owner.
- 4.Get advice. A free review can confirm how much of your service counts and what you are owed.
This connects closely to how severance is calculated and whether any termination clause the new owner asked you to sign is even enforceable. If in doubt, do not sign, and get the situation reviewed first.
Frequently asked questions
Does my severance reset if my company is sold in Ontario?
Usually not. Under section 9 of the ESA, if the buyer keeps you on, your employment is deemed continuous and your prior service counts. At common law, courts also credit your prior service and experience, so a sale does not reset your severance to zero.
Does my service with the old owner count after a sale?
Yes. The ESA treats your service as continuous when a business is sold and you keep working, and the common law recognizes the value of your prior experience to the new owner. Your total years, not just time since the sale, should drive your severance.
The new owner wants me to sign on as a new employee. Should I?
Be careful. This is often an attempt to reset your service and cap your severance. Courts look at the substance of the relationship, not just the paperwork, but a poorly explained new contract can still cost you. Have it reviewed before signing.
I was let go after my company was sold. How is my severance calculated?
It should reflect your total length of service, including your years with the predecessor, not just your time with the new owner. For long-service employees that difference can be very large, so do not accept a figure based only on the post-sale period.
Daniel Carter
Legal Writer, Mirza Law
Daniel Carter is a legal writer at Mirza Law in Toronto. He writes about layoffs, employment contracts, and the steps to take before you sign anything from your employer.
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