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Debra, Lawyer
Category: Canada Law
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Experience:  Lawyer
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Our company in BC has sold to a company providing the same

Customer Question

Our company in BC has sold to a company providing the same services. The purchasers did not assume the liability for the employees however, on the last day of business, they offered employment to all of our employees and the majority accepted. We terminated more than 50 employees (mass termination). A supervisor at BC Employment Standards insisted that we have to pay the regular severance plus an additional 8 weeks. Because the employees were terminated by us and rehired by the purchaser on the same day, it is not considered "continuous employment". Our company has no money left to pay the 8 weeks and we did not receive any funds for goodwill. The sale was not a share sale and the funds only covered our lease liabilities. Should the fact the employees were hired on the same day as their terminations negate the extra 8 weeks severance. The extra severance is creating undue hardship for the directors of the company. The will not receive payment for the shareholder loans to the company and they also have to sell their homes. . My understanding is that the purpose of the 8 extra weeks of severance is to allow the employees time to find another job. BC Employment insists we have to pay it.
Sec 65(1)f states the Sec 63 and 64 do not apply to an employee "who has been offered and has refused reasonable alternative employment by the employer.
Sec 65(4)b says that Section 64 does not apply to any employee who "is laid off or terminated as a result of the normal seasonal reduction, suspension or closure of an operation". Our doors are closed and BC Employment Standards says the closure refers to seasonal operations only. I believe this is a matter of interpretation.
Submitted: 2 years ago.
Category: Canada Law
Expert:  Debra replied 2 years ago.
The new company had the right to rehire your employees but making it clear they don't want this to be a continuous employment situation because they don't want to be stuck with the higher termination pay. And there is no way your selling your business could be said to be a result of seasonal reduction. So the corporation is liable for the termination pay. I don't see why the directors would be as their personal liability extends to wages that are earned and not termination pay. But there is no doubt that the corporation is liable for termination pay and if sued it could be much higher than the 8 weeks as that is just what Employment Standards would enforce but under common law the courts could order more depending on the facts.

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