When a business is sold and transferred to someone, both the vendor (old employer) and the purchaser (new employer) have obligations.
The Fair Work Act contains complex transfer of business provisions which affect both the new employer and the old employer in a transfer of business scenario. If advice is taken prior to the completion of the transfer of business, a new employer may be able to obtain additional protection where they are employing transferring employees.
Common mistakes we see when transferring employment
- New employers not taking advice before completion of the business purchase.
- New employers not doing a due diligence of employees’ personnel files; payroll; etc before completion of the business purchase.
- Old employers not understanding their obligations to consult with employees prior to completion of the business sale.
- Old employers not understanding their obligations to employees in relation to providing notice of termination; paying their final entitlements and whether a redundancy has occurred.
- New employers not understanding their obligations with respect to an existing Enterprise Agreement for the business that is being purchased and its application to them moving forward.
Key risks of getting it wrong
A new employer who does not take advice prior to completing the purchase of a business risks:
- transferring employees to their employment that they would prefer not to have;
- not knowing if employees have been paid correctly and employment records are accurate;
- not having the ability to terminate a transferring employee’s employment without risk of an unfair dismissal claim; and
- not having the ability to terminate a transferring employee’s employment within the first 12 months’ due to redundancy without the risk of having to pay a redundancy payment.
How can we help you?
Seeking employment law advice prior to selling/purchasing a business is vital to both the seller and the purchaser.
Get in touch with one of our experienced lawyers at Aitken Legal to help navigate the transfer efficiently and ensure you meet your obligations and reduce your risks.