Canada: National Report - Employment and Labour Considerations in Business Transactions – Part I: Understanding the Transaction

Those who plan, structure and execute business transactions for organizations, and those with human resources and labour relations responsibilities within them, must identify and understand related employment and labour issues. They must also take steps to ensure that they meet the transaction's objectives without unintended consequences. In Part 1 of our two-part presentation, we underscore the importance of understanding the transaction by asking these four questions about a transaction's objective and nature, jurisdiction, and post-transaction employment needs:

1. What is the objective of the transaction?

The first question has to be, "What are we trying to achieve with this transaction?"

In some cases, the proposed transaction is driven by employment and labour issues — for example, to reduce labour costs.

In many cases, there is no direct labour or employment objective, but it may be possible to identify collateral objectives related to labour and employment. For example, a merger or acquisition may introduce new opportunities for skill development or for promotion. You will want to ensure that the transaction captures those benefits and allows them to be exploited.

And there is almost always the possibility that labour and employment issues can affect the outcome, for good or ill. Communication with employees is always crucial to limit the potential for misunderstanding and uncertainty and to emphasize the positive for the sake of employee morale.

In all situations, it is crucial to understand the objective of a transaction and to review all labour and employment issues with a view to improving the chances of achieving the objective or to minimizing the risks associated with the objective.

A useful early step to help understand the objective and identify the issues is to sketch out the pre- and post-transaction organization and work-flow charts.

2. What is the nature of the transaction?

Is the proposed transaction a purchase of another business? If so, is it an asset or share purchase? Or is it a merger/amalgamation with another company, an outsourcing, or a corporate reorganization?

It is important to review all labour and employment issues as soon as possible to make an initial assessment of whether the objectives can be met. Early identification of the issues can also influence the final structure of the transaction. HR and labour relations leaders should not be shy about reviewing the issues with those who are leading the transaction to ensure that the best possible structure is chosen.

3. What jurisdictions are involved?

If the transaction involves organizations from different jurisdictions, there could be very different treatment of employment issues. That could be an issue for organizations operating under different provincial jurisdictions. Even more complicated is a transaction involving organizations whose employees are variously federally and provincially regulated. The different successor and termination provisions of labour and employment legislation will have to be considered, and how the post-transaction organization is to be governed must be determined.

4. What are the employment needs?

Post-transaction employment needs are a crucial consideration. Acquiring another business, bringing together two or more operations, or outsourcing certain work may result in the opportunity or need to reduce the workforce.

If there is to be a reduction, there are issues of when and how it should be accomplished, and at whose expense.

A realistic sense of timing is also needed. Many changes require a period of transition and can generate the need to offer incentives for employees to stay to a certain date, even though they know their employment is ending.

In many situations, key employees will need encouragement to stay. It is likely that as the economy improves, a renewed effort to retain the top talent will be necessary and the number of employees considered "key" will increase.

In Part II, we will review in detail the labour and employment issues that typically arise in various transactions. We will also look at new developments in privacy law that assist in the full collection, use and disclosure of personal information necessary for proper consideration of the labour and employment issues. In the meantime, here is a checklist of the considerations to be addressed more fully in our next issue:

  • Terms of employment: What are all the common law, statutory and contractual terms of employment of affected employees?
  • Collective bargaining obligations: What collective agreements, certifications and union relationships are in place?
  • Union and non-union "successorship": Will the transaction lead to assuming collective bargaining obligations or the accrued seniority and rights of non-union employees?
  • Offers of employment: Do new offers of employment need to be made, by whom, when, and how?
  • Terminations: Are terminations of employment required, and what are the common law, statutory and contractual obligations?
  • Employees not actively at work: Who will employ those who are currently on some form of leave, and who will employ them when they are ready to return to work?
  • Employment/labour claims and litigation: What ongoing or threatened claims and suits might be assumed in the transaction, how will they be handled, and who will be liable?
  • Pensions and benefits: Will changes to pensions and benefits be necessary? Are there any funding issues with pension obligations? What regulatory hurdles are in the way?
  • Workers' compensation: Will the transaction be good or bad for the rate payable for workers' compensation?
  • Employment Insurance and Canada Pension Plan: Will the transaction result in employer contributions starting anew, and is the cost significant enough to alter the structure or timing of the transaction?
  • Immigration: Do any of the employees of a party need to enter Canada from time to time as part of the negotiation or due diligence for the transaction? Are any of the affected employees in Canada on a work permit specific to the current employer?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.