In theory, the two periods of employment are different depending on the common law when a person`s employment ends with an employer and begins with a new employer. The Asset Purchase Deal was concluded on November 2, 2017. The employee continued to work continuously, although her redundancy date at the former company was set for November 24, 2019. It is helpful for the buyer to have a due diligence checklist to ensure that all relevant questions are asked. Buying a business can be an integral part of the expansion and success of an existing business. However, regardless of whether such an acquisition is in the best interests of the purchaser, consideration should be given to the seller`s work and employment obligations, agreements and commitments. Due Diligence is essential to any acquisition and it is important that a worker and an employment law specialist be involved in the planning and documentation of the transaction. The Ontario Superior Court decision in Manthadi v. ASCO Manufacturing, 2019 ONSC 5572 shows how an employer can obtain unexpected employment commitments after an asset purchase deal. It stresses the importance of careful wording in recruiting staff in these situations. However, as some employers may deplore, sympathetic complainants may give less theoretical results. That is what happened in this case.
The applicant had an important benefit in this case, its transfer to the buyer was apparently treated without a plan, and the buyer then put it on the dismissal and then disappeared. Therefore, it is important for a potential buyer to do due diligence in order to understand and, if possible, minimize the risk of an acquisition transaction. The buyer should have a complete understanding of the seller`s employment practices, existing or threatened employment obligations and union obligations. Where such obligations exist or are threatened, transaction documents should contain appropriate guarantees, agreements and compensation provisions to specify what the buyer`s agreements are and what the obligations are between the buyer and the seller. When designing the transaction, the buyer should strive to determine whether the integration of the buyer and the seller`s facilities and staff is important in understanding the legal consequences of integration. In theory, this section only protects workers` legal rights if they are transferred under an asset contract. In Ontario, service-based rights are created for leave (and vacation pay), termination and severance pay. The result is that buyers are not able to enter into a contract to recognize workers` performance under the Employment Standards Act, 2000. The legal provision does not explicitly provide for the rights of the common law to be maintained.
In its judgment, the Court found that there was no agreement with the employee that the new company would recognize its past performance only for legal purposes.