When an employer who is in the WA state industrial relations system sells or transfers the business to a new business owner the old employer has obligations to the employees, as does the new business owner if the employees are re-employed.
This is general information on the minimum obligations and entitlements in the state industrial relations system. Buying or selling a business is complex, and legal and accounting advice specific to your circumstances should always be obtained.
When an employer sells a business, the employees are made redundant and their contracts of employment will end. The new business owner is not obliged to re-employ the employees of the business.
The old employer selling the business must:
- Provide the required notice periods
- Provide information and hold discussions with employees about the impact of significant change
- Pay out employees’ annual leave entitlements
- Keep all employment records relating to annual leave and long service leave for the impacted employees for not less than 7 years after employment ends, and retain other employment records not less than 7 years after they are made.
If the new business owner is not employing the seller’s employees, the old employer may also need to:
- Pay severance payments depending on the size of the business and the provisions of the relevant WA award or industrial agreement.
- Pay out long service leave entitlements if the employee has at least 7 years of continuous employment.
If the new business owner is employing the employees, the old employer must:
- Provide long service leave records to the new business owner, as the new employee will be responsible for long service leave entitlements under the provisions for long service leave when business ownership changes.
- Provide details to the new business owner about all employees’ length of service, as service with the old employer will count toward the entitlement to unpaid parental leave, and may count towards entitlements to future severance payments.
- Check whether the relevant WA award as some WA awards provide for employees’ personal leave to be carried over to a new employer when there is a change of business ownership.
If the new business owner is employing the employees, the old employer is not obliged to pay severance pay if the employee’s period of continuous service with the seller is recognised by the buyer.
