Yes, directly and regardless of the purchase agreement — the indemnity allocates the loss between buyer and seller, but it gives the employees nothing.
Short answer
The Act respecting labour standards s.96 provides that an alienation of an undertaking “does not invalidate any civil claim…which is not paid at the time of such alienation,” and that “The former employer and the new employer are bound solidarily in respect of that claim.” That gives the employee — and the CNESST acting for the employee — a direct right against the purchaser that no agreement between vendor and buyer can qualify. Ontario has no equivalent: ESA s.4(5) creates joint and several liability only between persons already treated as one employer under a common-control finding, not as a consequence of an arm’s-length sale.
The indemnity is a recourse over between vendor and buyer; it is not a defence to the employee’s claim, and a recourse over against a vendor that has since distributed its proceeds and dissolved is a right without a remedy. There is no purchaser’s clearance certificate under the Act by which a buyer can extinguish s.96 exposure — contractual protection is the only protection, so it only lasts as long as the money it holds.
Section 115 provides that a civil action “is prescribed by one year from each due date” — not one year from closing — and s.116 extends that by a further six months if the CNESST sends a notice of inquiry. A wage that fell due weeks before closing can still be actionable well over a year into the buyer’s ownership. A holdback sized to a round twelve months from closing, rather than derived from the s.115/s.116 window measured from the last pre-closing pay date, can expire before the exposure does.
The full mechanic, including the holdback-timing gap, decided unpaid Quebec wages the buyer owed by operation of law.
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