Transferring employee

In cases where a business is sold or changes hands, employees who continue their jobs under the new management are known as transferring employees. This situation often arises during mergers, acquisitions or any scenario where the ownership of a business changes. The rights and obligations of these employees, including their tenure, benefits and employment terms may be affected by the transfer.

What happens to employees in a business sale

Under the Fair Work Act, a transfer of business happens when an employee's employment with the old employer ends, they start with the new employer within 3 months doing the same or substantially the same work, and there is a connection between the businesses, such as a sale of assets or outsourcing. The old employer's enterprise agreement usually transfers with them, and their service usually counts with the new employer, although a new employer that is not an associated entity can choose not to recognise some service. For example, the buyer of a café who keeps the existing staff may need to honour their accrued leave.

Call our HR advice line before you buy or sell a business with staff, and see associated entities.