Successor Employer on An Asset Sale Must Explicitly State That Prior Service Does Not Count:

In Kitchen v Brandt Tractor ( 2021 NBQB 064) Justice Terrance has a situation where after an asset sale the new employer offered the employee from the vendor employment and specified that his adye of hire would be the date of the transaction closing but there was no specific mention of whether his  prior service would be regognized.

This is what the Judge said:

[30] Nowhere is previous service mentioned in the context of termination or reasonable notice. The Employment Contract only recognizes past years of service for purposes of vacation. The defendant submits that because the Employment Contract only references vacation and is silent on the issue of reasonable notice then, by implication, prior service is excluded from the calculation of reasonable notice (expressio unis est exclusio alterius). I disagree. The purpose of advising the employee of whether or not prior service will be included in the calculation of reasonable notice on termination is to permit the employee to make an informed decision whether it is better in his interest to claim against his former employer for damages or accept the new offer of employment. An important part of that calculation is whether his prior years of service will be counted if he is terminated by the new employer. The offer of employment made by Brandt in this case is, at best, ambiguous. It does not expressly state that prior service will not be counted. In my view, the offer of employment made by Brandt was not sufficient to put the plaintiff on notice of the consequences of his decision to accept the new employment with Brandt. The defendant has failed to rebut the presumption identified in Sorel andrecognized in Stone.

[31] The plaintiff’s entitlement to reasonable notice will be based on 11 years and 8 months service.


Under the ESA this is not an issue as the Act provides for deemed continuous service where the purchaser continues the employment of the vendor’s employees whether the transaction is a share sale or an asset sale.

However under the common law, one must first distinguish between an asset sale and a share  sale. There is no issue with a share sale as the employer is the same corporate entity, only the owner of the shares changes. However the case law supports the proposition that that is different for an asset sale. This actually goes back to ancient anti slavery provisions which prevented the Master from selling the Slave.

Quere, isn’t it ridiculous that an employee’s legal rights flow from how a bunch of tax lawyers decide to set up a transaction? How is the employee supposed to know or understand the difference between these two types of sale ? I digress.

As a workaround to this absurd law, judges have created this presumption of inherited prior service. However like all presumptions, they  can be overturned with evidence to the contrary.

So if an employer successfully negates the presumption then for common law purposes there is new employment but for ESA purposes there is  continuous employment. Moreover if the contract purports to say that for all purposes service is not continuous, is that provision void as it is contrary to the ESA?

Who ever said that employment law was easy.