Published 14 August 2026 · Updated 29 September 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty
Under Ontario’s ESA, when the buyer of your restaurant employs your staff, their length of employment carries over — the buyer must recognize prior service for ESA entitlements. If the buyer does not keep them, you as seller can owe termination pay and, in some cases, severance.
Unionized? Successor rights can bind the buyer — involve counsel early.
Your staff are one of the most valuable things a buyer is acquiring — a kitchen that runs itself is worth paying for — and, at the same time, one of your biggest closing-table liabilities if the handover is done badly. Ontario’s rules here are more seller-friendly than owners fear, but only if you understand who owes what, and when. This is one chapter of the full series on how to sell a restaurant in Ontario.
What happens to staff when a restaurant is sold?
It depends almost entirely on one question: does the buyer employ them after closing? Ontario’s guide to the Employment Standards Act deals with this under the heading of continuity of employment. When a business is sold and the purchaser employs the seller’s employees, the guide says a person’s length of employment with the seller is attributed to the purchaser — the new employer has to recognize the time the person worked for the previous employer. Their service does not reset to zero; it travels with them.
That single rule drives both sides of the deal. For the employees, it protects the entitlements that grow with service. For you and the buyer, it decides who carries the cost of those entitlements after closing — which is why the treatment of staff is negotiated in the purchase agreement, not left to chance.
What if the buyer keeps your staff?
Then, for ESA purposes, employment continues. The buyer inherits each continuing employee’s length of service, and with it the ESA entitlements that depend on service — so if the buyer later ends someone’s employment, the years that person worked for you count in what the buyer owes them. Buyers understand this, and a well-advised buyer prices it in: they are taking on your team’s accumulated service, not hiring a room full of new starters.
One timing rule from the province’s guide is worth knowing: prior employment is not attributed to the new owner if the employee is hired more than 13 weeks after the earlier of their last day with the seller and the day of the sale. A prompt handover keeps continuity intact; a long gap can break the chain.
What is your home actually worth today?
I will give you a real number based on comparable sales on your street — not an automated estimate. No obligation, and I will tell you plainly if now is the wrong time to sell.
Get my home valuation Call or text 833-330-1925
Jatin Dua, Broker of Record — RE/MAX Quantum Realty Inc., Brokerage. Not intended to solicit buyers or sellers currently under contract with another brokerage.
What if the buyer does not keep them — or keeps only some?
Then the exposure can land on you. If the buyer does not continue employing your staff, the seller can owe termination pay and, where the thresholds are met, severance pay under the ESA, because it was the seller’s employment of them that ended. This is the number that surprises owners: a long-tenured team that is not taken on by the buyer is a real closing cost, and it belongs in your deal math from the first conversation — not discovered in the last week before closing, which is how it shows up in restaurant sales that go wrong.
| Scenario | ESA position | Practical effect |
|---|---|---|
| Buyer employs your staff | Length of employment attributed to the purchaser; service is continuous for ESA entitlements | The buyer carries accumulated service going forward; deal should say so expressly |
| Buyer does not employ them | Seller can owe ESA termination pay and, where thresholds are met, severance | A closing cost you must budget for and negotiate around |
| Buyer keeps only some staff | Continuity for those employed; potential seller obligations for those not taken on | Get the list of who is being offered employment early and in writing |
| Employee hired more than 13 weeks after the sale or their last day, whichever is earlier | Prior employment is not attributed to the new owner | Timing of offers matters; a long gap breaks continuity |
| Unionized workplace | Successor rights under the Labour Relations Act can bind the buyer to the union and collective agreement | Specialist labour advice, engaged early |
What if your restaurant is unionized?
Then a different statute joins the deal. Under Ontario’s Labour Relations Act, successor rights can mean the union’s bargaining rights and the collective agreement follow the business to the buyer. That changes what the buyer is acquiring and how the transaction is planned, and it is well beyond what a general guide — or a Realtor — should be advising on. If your staff are unionized, a labour lawyer belongs on your team before the business goes to market.
When should you tell your staff you are selling?
Later than your conscience suggests, and earlier than the closing date — exactly when depends on the deal. The tension is real: word getting out early can cost you the very staff stability the buyer is paying for, yet the buyer usually needs to meet key people before going firm, and continuing employees need their offers before closing. The working compromise in most deals is sequenced disclosure — confidential marketing first, key staff under controlled conditions late in due diligence, the full team once the deal is certain. How to run that sequence without leaks is its own guide: how a confidential restaurant sale works.
Why does staff stability show up in the price?
Because the team is part of what is being valued. A tenured kitchen, a manager who can run service without you, low turnover — these reduce the buyer’s key-person risk and support the goodwill number, which is why staff stability sits in the factor table of the valuation guide. Accurate, current employment records — start dates, wages, roles — are part of sale preparation: the buyer will ask for them in due diligence, and the ESA analysis above depends on them being right.
How I help
Commercial and business sales, including restaurants, are part of my practice alongside residential work across the GTA. I coordinate the confidential marketing and negotiation — including the sequencing of staff disclosure — while your lawyer handles the employment and labour law side and your accountant handles the tax execution.
The takeaway
The ESA question in every staffed restaurant sale is simple: is the buyer employing your people? If yes, their service carries over to the buyer. If no, the termination and severance exposure can be yours. Budget for it, negotiate it expressly in the agreement, and if there is a union, bring in labour counsel before anything else happens.
Thinking about selling your restaurant?
Tell me a little about the business and I will give you a confidential, no-obligation read on what it might be worth and how a quiet sale would work. No pitch, no obligation.
[email protected] · 833-330-1925 · Book a confidential consultation
Confidential. Reviewed personally and answered within 24 hours. I never share, sell or distribute your information.
Free tool — AI restaurant value estimator
Restaurant valuation
What is your restaurant
actually worth?
Restaurants don’t sell on revenue — they sell on what the owner takes home, multiplied by how easy the business is to hand over. Your lease and your rent do more damage or more good than anything on the menu. This weighs all of it in about two minutes.
Reading comparable restaurant sales…
Indicative business value
—
$0$0
Most likely sale price $0 · Implied multiple 0×
Where I’d list it
$0
Comparable restaurants sell for about 85% of asking. Price to that, not to hope.
How the number is built
Your owner earnings, multiplied by what buyers pay for a business like yours — then adjusted line by line.
What the market pays
Benchmarks from completed restaurant sales.
What a buyer will ask for
- Three years of financials — statements and tax returns, not just POS reports.
- The lease, with the assignment clause and every option in writing.
- Proof of your add-backs. Lenders reject the ones you cannot document, and that is the single biggest reason deals reprice.
- Equipment list showing what is owned outright and what is leased or financed.
- Licences — AGCO, food premises, patio, and whether each one transfers.
- WSIB, HST and payroll accounts in good standing.
Want the number a buyer
would actually sign?
Send me three years of financials and your lease and I will price it properly — normalised earnings, real comparables, a defensible asking price and a confidential marketing plan that never tips off your staff or your landlord.
Frequently asked questions
Do my employees automatically keep their jobs when I sell my restaurant?
No — the ESA does not force the buyer to hire them. What it does say, per Ontario’s guide, is that when the buyer does employ the seller’s staff, their length of employment is attributed to the buyer, so their service continues for ESA entitlements rather than resetting.
Do I owe my staff severance if the buyer doesn’t keep them?
Possibly. If the buyer does not continue employing your staff, the seller can owe termination pay and, where the ESA’s thresholds are met, severance pay, because the seller’s employment of them has ended. The exposure depends on each employee’s service and circumstances — have your lawyer quantify it before you negotiate.
Does my staff’s seniority reset when the buyer takes over?
Not for ESA purposes, if they are employed by the buyer in time. Ontario’s guide says prior employment is not attributed to the new owner if the employee is hired more than 13 weeks after the earlier of their last day with the seller and the day of the sale — inside that window, service carries over.
What if my restaurant staff are unionized?
Successor rights under Ontario’s Labour Relations Act can mean the union’s bargaining rights and the collective agreement bind the buyer of the business. That materially changes the transaction, and it needs a labour lawyer on your team before the business goes to market.
What is your home actually worth today?
I will give you a real number based on comparable sales on your street — not an automated estimate. No obligation, and I will tell you plainly if now is the wrong time to sell.
Get my home valuation Call or text 833-330-1925
Jatin Dua, Broker of Record — RE/MAX Quantum Realty Inc., Brokerage. Not intended to solicit buyers or sellers currently under contract with another brokerage.
Sources
- Ontario — Your guide to the Employment Standards Act: Continuity of employment. Attribution of length of employment to the purchaser, and the 13-week rule. Accessed 13 August 2026.
- Labour Relations Act, 1995, S.O. 1995, c. 1, Sched. A (e-Laws). The successor-rights framework flagged above for unionized workplaces. Accessed 13 August 2026.
Related reading
- How to sell a restaurant in Ontario: the complete process
- How a confidential restaurant sale works
- How restaurant valuation actually works in Ontario
About the author — Jatin Dua
Jatin Dua is the Broker of Record at RE/MAX Quantum Realty in Etobicoke, Toronto. Commercial and business sales — including restaurants — are part of his practice, alongside residential work across the GTA. Content on this site is checked against primary sources — the CRA, the AGCO and ontario.ca — before publication.
Reach me at [email protected] or 833-330-1925.