The New Brunswick Labour and Employment Board has ruled that an employer must pay additional termination notice to a long-serving employee despite contractual arrangements between business owners intended to reset employment tenure.
The Labour and Employment Board affirmed a Director of Employment Standards order requiring the operator of Harbour Road Pub to pay $1,923.61 to B.M., a prep cook who had worked at the establishment since 2014 under various owners.
The case centred on whether B.M. was entitled to four weeks’ notice of termination based on her years of service with previous owners of the pub, rather than the two weeks’ notice provided by her current employer when she was dismissed in March 2024.
Business sale doesn’t reset employment tenure
The pub’s current owner, J.G., had purchased the business assets from the previous owner in February 2023. Their asset transfer agreement included a clause requiring the previous owner to “dismiss all the employees of the Business and pay any outstanding benefits according to the Employment Standards Act.”
However, the board found that the previous owner never provided written termination notices to employees, no records of employment were issued, and B.M. continued working in the same position at the same rate of pay without interruption through the ownership change.
J.G. testified he was unaware employees hadn’t received written dismissal notices from the previous owner and claimed he “would have done so had he known that the employees had not received a written notice of dismissal.”
The decision turned on the application of section 89 of the New Brunswick Employment Standards Act, which states that when a business is “disposed of, transferred or sold in any manner,” an employee’s period of employment “shall be deemed to have been a period of employment with the disposee, transferee, purchaser or amalgamation and the continuity of employment shall be deemed to be unbroken.”
Protection for employees fundamental to legislation
The board cited New Brunswick Court of Appeal decisions interpreting section 89, noting its purpose is to “ensure minimal protection for employees by deeming the period of their employment… to be unbroken.”
In its decision, the board explained that “non-union employees, at common law, are vulnerable in that they can practically be forced, because of economic circumstances, to accept employment with a new employer and lose the benefits associated with length of service with a former employer by reason of a break in continuity of employment.”
The board also found that section 28 of the Act prohibits employers from entering into agreements to avoid the clear provisions of the Employment Standards Act, addressing the employer’s argument that the asset purchase agreement absolved him of liability under section 89.
Evidence showed continuous employment
Employment Standards Officer A.K. testified that he investigated B.M.’s complaint and determined she had been continuously employed at the pub since 2014 with no relevant interruptions in service (defined as greater than 12 months).
A.K. verified B.M.’s employment history through records of employment and T-4s from the current and previous owners. He determined her job had not changed when J.G. took over operations in February 2023.
B.M. testified she never received anything in writing indicating dismissal from the previous owner, and it was her understanding that all employees would be kept on by the new owner. She was not interviewed by J.G. and did not receive a record of employment from the predecessor employer.
A.M., the pub’s manager who had been employed there for several years, testified that the previous owner had told staff they would “be let go, but everyone would be rehired with the same rate of pay and position.” However, she confirmed that neither she nor any employees received written termination notices or records of employment.
Business changes insufficient to avoid continuity provisions
J.G. argued that the character of the business had changed significantly from a bar primarily selling alcohol to a family restaurant selling mostly food (approximately 80% food, 20% alcohol), which should take it outside the application of section 89.
The board rejected this argument, finding the essential character of the business had not changed. The “Harbour Road Pub” retained its name and location and, apart from some renovations, continued to operate as a restaurant and bar with employees keeping the same positions and rates of pay.
The board affirmed the Director of Employment Standards’ order, concluding that B.M.’s years of employment with previous owners counted toward establishing her entitlement to four weeks’ notice under subsection 30(2) of the Act.
The $1,923.61 deposit paid by the employer and held in trust by the board was ordered to be released to B.M.
For more information, see Martin v 740602 NB Ltd., 2025 CanLII 37561 (NB LEB).
