Tag archives: Employment and labour

Avoiding independent contractor liability in M&A

The distinction between employees and independent contractors is significant as it pertains to workers’ legal entitlements. Employees have an exclusive working relationship with an employer, which engages rights and obligations under applicable employment legislation and the common law. By contrast, independent contractor agreements are entered into by legal and contractual equals. As a result, independent contractors are not afforded employment law protections.

The misclassification of employees as independent contractors continues to attract considerable legal action and media attention. Recently, Ontario has seen a rise in class action lawsuits involving claimants alleging to have been misclassified by their purported employers. … Continue Reading

Labour considerations in asset deals – non-unionized employees

From an employment and labour perspective, buying the assets of a business may be preferable to acquiring its shares, as buying assets enables the buyer to clean house and hire new staff.

When considering the merits of an asset transaction, however, a buyer should consider the points raised below regarding the seller’s workforce, as these can significantly affect valuation.

Provincial jurisdiction

Unlike with unionized employees, generally speaking there are no rules protecting non-unionized employees after a business is sold—a buyer can keep the seller’s employees or let them go, even if it continues the same business.

Obviously, the seller will … Continue Reading

Labour considerations in asset deals – unionized employees

This post was contributed by Jean Allard, Partner, Norton Rose Canada

There are many business and tax reasons for acquiring the assets of a business instead of its shares.

From an employment and labour perspective, buying a business’s assets may be preferable to acquiring its shares because the buyer can clean house and recruit new staff.

Provincial jurisdiction

Each Canadian province has its own legislation governing collective labour relations. This legislation contains provisions defeating the principle of privity of contract and, if the asset sale has the effect of transferring the business to the buyer, requiring that the collective … Continue Reading

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