What happens to employee entitlements when a business is purchased?

Buying or selling a business isn't as simple as it sounds.

What happens to the employee entitlements?

Do you need to recognize

the employees’ service

with the previous employer?

What happens if the employee gets disgruntled

by the new management?

When you're buying

and selling a new business,

there are a few factors

that you need to consider.

Typically,

when there is

a transfer of business,

the new employer has to recognize

the employees’ service

with the old employer,

when working out

most of the entitlements.

This could be including sick

and carer's leave,

requests for flexible

working arrangements

or parental leave.

However, there are

some entitlements

that the new employer

might not have to recognize,

and these include

redundancy, annual leave,

long service leave, unfair dismissal

or notice of termination.

For example,

with the annual leave,

two things can occur.

Annual leave

that is accumulated with

the old employer will be carried

across to the new employer.

Or, when the employers

are not associated entities,

the new employer can decide

not to recognize

the employees’ service

with the old employer,

and in that case,

the old employer has to pay out

the employees’ untaken

accumulated annual leave.

Alternatively,

if the employees are terminated

and entitlements are paid off

by the previous owner,

the new employers may not need

to recognize

most of these entitlements.

However, there are still some

they carry forward,

so make sure you do your research.

Other things to note are,

when there is a change

in management,

employees can become disgruntled

as there are new rules

that they may not like.

Managing the culture is crucial

and having the right contract

and handbook is key.

Give us a call.

We're more than happy

to give you some free

advice around

what you need to be aware of

and what the risks are associated

with the transition.

Our clients can get lightning-fast

answers to your employment

related questions

with Bright Lightning, an

AI-powered HR platform.