Long service leave - What happens when business ownership changes?

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This page provides information on the provisions of the Long Service Leave Act 1958 (WA).  For more information see the main Long Service Leave page.

To be entitled to long service leave under the Long Service Leave Act, an employee must have continuous employment with ‘the one and the same employer’.

An employer includes sole traders, partnerships, companies, incorporated associations, unincorporated associations and public sector agencies and authorities.

‘The one and the same employer’ also includes employers who previously owned a business, where there has been a ‘transmission of business’.

Transmission of business and change of employer

A transmission of business can occur when one employer sells its business (or part of its business) to another employer. A transmission may also occur in other ways, including by succession or assignment.

If:

  • there has been a transmission of business;
  • a person was an employee of the previous employer at the time of the transmission of business; and
  • the person became an employee of the new employer,

the employee’s period of continuous employment with the new employer will include the period of continuous employment they had with their previous employer.

This means an employer who buys or otherwise acquires a business or part of a business will take on the long service leave obligations for existing employees if there has been a transmission of business. This applies regardless of anything written in a sale of business contract.

An example – 

On 1 January 2011, Sarah bought a small fashion boutique from Alex. One of the staff members, Kim had worked for Alex for 6 years and then worked for Sarah when Sarah bought the business. When Kim resigned on 31 December 2015, she had worked a total of 11 years in the business (6 years for Alex and 5 years for Sarah).  As the business was transmitted from Alex to Sarah in 2011, Sarah was liable to pay all of the long service leave Kim had accrued while working in the business i.e. while working for both Alex and Sarah.

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