Private sector employers and employees
Telephone: 1300 655 266
Mailing address
Locked Bag 100
East Perth WA 6892
Buying or selling a business
This information is only relevant to employers and employees in the WA state industrial relations system – sole traders, unincorporated partnerships, unincorporated trusts and some incorporated or not for profit organisations. Find out more on the Guide to who is in the WA state system page.
If you operate or are employed by a Pty Ltd business – you can find information on this topic on the Fair Work Ombudsman website.
About this page
- This page provides an overview of employer obligations when a business is bought or sold.
- Selling a business commonly means there has been a “transmission or transfer of business”. Where this occurs, both the seller and the buyer of a business may have obligations to the employees of the business. These obligations depend on whether the buyer intends to employ any of the seller’s employees and if so, whether these employees accept an offer of employment with the buyer.
- Buying or selling a business can be complex, and legal and accounting advice should be sought.
Seller obligations
When a business is sold, its employees are made redundant and their contracts of employment with the seller terminate. The seller’s obligation to their employees in this situation can vary depending on whether the buyer of the business employs the seller’s employees. Outlined below are the obligations that apply.
|
|
Obligations when the buyer DOES NOT employ the seller’s employees |
Obligations when the buyer DOES employ the seller’s employees |
|---|---|---|
|
Inform employees about intention to sell the business |
Inform employees of the intended sale of the business and discuss the likely effects of the change This should occur as soon as reasonably practicable after the decision to sell the business has been made |
Inform employees of the intended sale of the business and discuss the likely effects of the change. This should occur as soon as reasonably practicable after the decision to sell the business has been made. |
|
Notice of termination |
Provide notice of termination or pay in lieu of notice to eligible employees – the Dismissal notice periods page provides information on notice periods |
Provide notice of termination or pay in lieu of notice to eligible employees – the Dismissal notice periods page provides information on notice periods. |
|
Notify Centrelink and consult with unions about the redundancies |
Prior to the sale of the business, notify Centrelink and consult with relevant unions about the redundancies, regardless of the number of employees being made redundant by the sale of the business |
If 15 or more employees are to be made redundant by the sale of the business, prior to the sale of the business notify Centrelink and consult with relevant unions about the redundancies. |
|
Annual leave |
Pay out employees’ accrued annual leave |
Pay out employees’ accrued annual leave. |
|
Long service leave |
Pay out employees’ long service leave entitlements
|
In this situation, the seller is not obliged to pay out employees’ long service leave entitlements. Once employed, the buyer will become responsible for the employees’ long service leave entitlements. |
|
Severance pay |
Pay severance pay to employees, provided the business has 15 or more employees. Note: some awards and agreements may require the payment of severance pay regardless of the number of employees in the business. The Redundancy payment obligations page provides further information about severance pay |
In this situation the seller is not obliged to pay severance pay, provided the employee’s period of continuous service with the seller is recognised by the buyer. If an employee rejects an offer of employment with the buyer, the seller may not, in some circumstances, be obliged to pay severance pay. The Redundancy payment obligations page provides more information on the circumstances where an employee may not be eligible for severance pay. |
|
Provide copies of relevant employment records |
Not applicable |
Once employed, the buyer is responsible for any accrued and future long service leave entitlements of the seller’s employees. The seller will need to provide the buyer with copies of employment records relating to each employee's accrued long service leave entitlements and length of service. Penalties apply for failing to transfer copies of transferring employees’ employment records to the new employer, where there is a transfer of business. Financial arrangements may be entered into between the buyer and seller to recognise accrued long service leave entitlements and service towards future long service leave accruals. Information regarding employees’ length of service is also relevant for unpaid parental leave as service with the seller will count towards the 12 months’ service required for an employee to be entitled to unpaid parental leave. |
|
Provide information about the awards, agreements and contracts of service in place |
Not applicable |
The buyer may request information from the seller about the awards, agreements and/or contracts of employment currently in place. |
Buyer obligations
The buyer of a business is not obligated to take on the employees of the seller – they will need to decide if they wish to do so and this is a matter to be discussed between the seller and buyer as part of the terms of sale.
If the buyer does not employ the seller’s employees, the buyer has no obligation to them.
If the buyer intends to employ the seller’s employees, they should request information from the seller about any relevant awards, agreements and contracts of employment to understand the obligations they take on as the employees’ new employer. This should include records relating to hours worked, earnings, paid and unpaid leave and other information necessary to calculate employees’ long service leave entitlements. Buyers should also contact contact Wageline to ensure they understand their employment obligations.
The buyer will need to make employment offers to the seller’s employees and advise the seller’s employees in writing of their terms and conditions of employment.
If the buyer employs the seller’s employees, they are required to recognise each employee’s continuous service with the seller for the purposes of:
- long service leave entitlements. Refer to the long service leave page for more information.
- unpaid parental leave.
In order to be entitled to long service leave under the Long Service Leave Act, an employee must have continuous employment with ‘the same employer’. ‘The same employer’ is not necessarily limited to one employer. If there has been a transmission or transfer of business, the term ‘the same employer’ will include any employers who previously owned that business and employed that employee. This means that where there is a transmission or transfer of business, the buyer will take on long service leave obligations for existing employees. The long service leave page has more information.
Penalties apply for sellers failing to transfer copies of transferring employees’ employment records to the new employer, where there is a transfer of business.
Share this page:
Last modified: