“You’re buying the assets,” he says. “You don’t have the right to unilaterally transfer employment contracts absent consent, so it’s not like the seller can say, ‘Sure, we will sell you all of our employment contracts.’ Usually, these are physical assets that are being transferred, and then the buyer will make offers of new employment to some or all of the existing staff.”
In a share purchase, the buyer acquires the shares of the company being sold, meaning the buyer takes control of the entire business, including its assets and liabilities.
With a share sale, the company doesn’t change, says Outerbridge.
“The sale of a corporation’s shares does not change the corporation’s relationship to its employees, and that’s whether they’re unionized or not unionized,” she says. ‘Its ownership changes, but the legal identity remains the same, and that goes for the employer-employee relationship as well.”
While there are different rules for Quebec, in an asset sale, the purchaser is not automatically required to take any of the vendor’s employees — unless there’s a requirement by way of a union or another statute, she says.
