When purchasing a business, if there is a clause that the new ownership is not liable for severance pay, who would be liable for the severance amount if an employee is terminated?

Hello,

The employment contract is between the employee and the company. At termination, the company is liable for severance. If ownership of the company has changed hands, then the owner at the time of termination would usually be liable unless there is a contract that says otherwise. If there is such a contract, then the other contracting party would likely be liable. In the scenario you have described, it looks like the seller has agreed that they would be responsible.

The terms of the sale of the business would have to be reviewed as would the circumstances leading to the termination. If you would like advise tailored to your specific situation, feel free to request a consultation with one of the experienced employment lawyers at Samfiru Tumarkin.

Regards,

Lluc Cerda
Lawyer