Understand Your Obligations to Employees When Exiting Your Business
When you exit your business, you need to be aware of and respect your employees’ rights. Here's what you'll need to know about your obligations.
Protect Employees—and Your Business
Depending on how you exit your business, you may not have to let your employees go. For instance, if you sell your business, your staff might stay with the company, under new management.
Or, if you're in a position where you might have to close your business due to hard economic times or slow sales, you might consider significantly cutting back your expenses in an effort to keep your doors open. One possible way to reduce your costs is to reduce your head count.
When doing this, however, try to avoid laying off good staff. The costs you will incur in training and productivity if you hire someone new in a few months will greatly exceed the cost of keeping a good employee with you now. Ask how flexible your team can be – maybe this is the perfect time for someone to go to 4 days per week to take that course they’ve always wanted to.
If you have 2+ employees, have explored flexible options and yet are still feeling the pinch, perhaps the Service Canada Work Share program can help. The program offers 55% wage coverage for EI-qualified employees who voluntarily accept a reduced work week for 6-26 weeks. To see if your business or employees qualify,see the Service Canada website.
Know Your Employees' Rights
Employees of your business have certain rights when a business is bought, sold, or dissolved. These rights are regulated by the Employment Standards Branch of the B.C. government, and are explained on the Employment Standards website.
Notice and Severance
Your employees might be entitled to certain notice periods and severance in the event of termination of employment. Specific information on this topic can be found in the Termination of Employment Fact Sheet from the B.C. Ministry of Labour, Employment Standards Branch.
You should set aside a contingency fund that will, at a minimum, cover wages owing, as well as other expenses, such as severance. Even if your business is incorporated, management can be held liable for these dollars owed to employees in the event of bankruptcy.