If a business is sold and the new owner continues to employ an employee without issuing a new contract, what is the likely implication if the employee is later terminated?

If a business is sold and the new owner continues to employ an employee without issuing a new contract, what is the likely implication if the employee is later terminated?

• A. They may terminate with no notice
• B. The employee's years of service prior to the sale must be added to the service for termination entitlements
• C. The sale terminates the employee
• D. The employee gains new service time only after the sale

Answer: (B)

When there’s a change of employer but the worker continues to be employed, there’s usually continuity of employment. Because the new owner keeps the same employee without a break, the worker’s entire period of service—both before and after the sale—counts toward termination entitlements such as notice or severance. That means if the employee is terminated later, the years worked before the sale are added to the service time used to determine how much notice or severance they are owed. The sale itself doesn’t erase the employee’s prior service, nor does it create a fresh, shorter service period.

When there’s a change of employer but the worker continues to be employed, there’s usually continuity of employment. Because the new owner keeps the same employee without a break, the worker’s entire period of service—both before and after the sale—counts toward termination entitlements such as notice or severance. That means if the employee is terminated later, the years worked before the sale are added to the service time used to determine how much notice or severance they are owed. The sale itself doesn’t erase the employee’s prior service, nor does it create a fresh, shorter service period.