Determining a successor employer

The difference between succession and buying up a company's assets
By Tim Mitchell
|Canadian Employment Law Today|Last Updated: 02/20/2013

Question: When one company is acquired by another company, what exactly constitutes a successor employer? What role do things like selling off the old company’s assets, occupying the same location and terminating employees and then rehiring some have in the determination?

Answer: The successorship provisions in labour relations legislation are well-litigated provisions intended to insure that bargaining rights associated with a particular business are not lost in the sale of that business.

Under the legislation, a purchaser that acquires control, management or supervision of all or part of a business or undertaking formerly operated by the previous employer may be declared to be the prior employer’s successor. Where a declaration of succession is made, the new employer acquires the bargaining relationship with the trade union certified in respect of the business or undertaking, as well as the former employer's obligations under any collective agreement binding it.