A significant life changing event occurs when you either buy or sell a business.
The excitement of becoming a new owner or retiring after years of toil could prove to be a nightmare if details of the sale are not properly documented (including how the parties deal with transferring employees).
Employees may fall into different categories such as casual, permanent or part time. They are also governed by different State awards and the Fair Work Act (Commonwealth).
As buyer of a business you need to know what industrial agreement (enterprise, determination, award or individual flexibility) applies to each transferring employee.
At law as buyer you are required to recognise past service with the seller with regard to personal/carers leave (sick leave), requests for flexible working arrangements, parental leave, annual leave and long service leave. Each of these entitlements must be considered separately and thoroughly.
Depending on the terms of your contract a buyer should have the right to either reject current employees or make an offer of employment to transferring employees.
As seller if a buyer chooses not to employ a transferring employee the seller has an obligation to pay the employee’s annual leave entitlements and the other leave entitlements referred to above including potentially a claim for redundancy (in the event that the business has more than 15 employees).
It is normally a requirement in a business sale contract that if a buyer offers employment to a transferring employee it must be on the same terms and conditions as the transferring employee’s employment with the seller.
The above information gives a brief overview of what the relevant parties to a business sale need to consider when buying or selling a business-seek proper advice before signing off!