When a business is sold, one of the first issues that must be resolved is what will be the treatment of the employees as part of the transaction and how will their accrued entitlements be dealt with.
If an employee continues or resumes activities with the buyer, upon the sale of the business, within three months of ending his or her employment with the previous employer, then those employees will be deemed to be transferring employees.
If the employees accept a position with the new employer, the buyer must recognise the employee’s prior service with the outgoing employer with respect to entitlements for sick and carers leave, pre-existing flexible working arrangements, parental leave and for determining the due date for long service leave entitlements.
Following completion of the sale and purchase of a business the buyer becomes responsible to the transferring employees for all accrued entitlements not taken or lawfully paid out by the seller.
In connection with the sale of business:
The seller before completion should provide to the buyer all the employee’s details including their commencement date, remuneration and entitlements.
The buyer will need to determine which employees they wish to employ.
The seller will need to provide notice to the employees that their employment with the seller is to terminate at completion of the sale of the business. At that time the buyer issues an offer of employment to the proposed transferring employees.
The appropriate adjustments are made at settlement in favour of the buyer to reflect the assumption of liabilities for the transferring employee accrued entitlements.
If you’d like to know more please contact our Commercial and Business Transaction team on (03) 5445 3333
This article was originally published in The Guardian Newspaper Swan Hill