Fired in Alberta: Employment Length of Service After a Business Sale

Another issue which can complicate severance for both employees and employers in Alberta happens after a company is purchased by another company. The question which arises is which date is used to calculate severance for fired employees? Is it the date the employee started work for the previous company? Or does the time of severance run from the date of the sale transaction? This article deals with a business purchased as a “going concern”, where it keeps operating after closing.

The Bardal factors that we have discussed previously include length of employment as a key factor. (See our article about calculating severance: https://www.flodenward.com/post/how-is-severance-calculated-in-alberta).

Employees, naturally want to have severance calculated for the entire time they worked for a company. Employers, conversely, want to have severance calculated from the date of the sale transaction only. In the case of Jones v. Temple Real Estate Investment Trust, Moen J. said there is an implied term in the employee's contract of employment with the new employer that employees will be given credit for years of past service for purposes of determining severance. - you can read the case here: https://www.canlii.org/en/ab/abqb/doc/2018/2018abqb606/2018abqb606.html.

In that same case Moen says at paragraph 18:

Companies can negate the implied term of the employment contract when they purchase another company only if the purchaser has an express term that the employee is being terminated in the contract of employment, “...but where the new employer has not included such a term, the employer is deemed to have contracted with the employees to give them credit for past service”.

What that means, practically, is that employees may have claims for severance unless new employment contracts are entered into after a transaction. Conversely, employers should be careful in negotiation severance that they turn their minds to employee severance issues.

If you would like to discuss how this might affect your situation, please contact us: https://www.flodenward.com/contact-us.

The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.