INSIGHTS: Selling your business? Don’t forget an important asset – your employees!

If you are selling your business, careful consideration must be given to your employees and what will happen to their employment as a result of the sale.

Assuming the sale is to an unrelated entity (so the employing entity will change), the employees will either transfer with the business to the new owner or their employment with the business will end.

Transferring employees

When an employee’s employment transfers to the new business, you must provide the new owner with copies of the employment records you are required by law to keep, such as wages payments and leave accruals and any other employee records that you have agreed to provide.

Even if the new owner has issued letters of offer or contracts of employment to the transferring employees, you must still give the employees written notice that their employment with your business is ending. The amount of notice is the greater of that set out in the contract of employment or in the Fair Work Act, which provides for between one and five weeks, depending on their age and length of service.

Employees who don’t transfer

You must also give written notice that their employment will end to employees who have not been offered employment with the new employer. Upon termination of employment, your business will be responsible for paying out annual leave, long service leave entitlements and any contractual entitlements owed to the employee.

It may also be the case that you will need to pay the employees a redundancy payment. The redundancy payment triggers if the employee has not been offered work by the new employer on terms and conditions that are substantially similar and on an overall basis no less favourable than the terms of employment with you immediately before the termination. A redundancy payment does not need to be made if the business (together with any related or associated business) employs less than 15 employees, or where an employee has less than 12 months service or is engaged on a casual basis. If you have 15 or more employees being made redundant you will also need to notify CentreLink.

Employees are an important asset to any business and ensuring the correct procedures are followed can minimise stress and additional costs involved with finalising the sale of your business. Failing to comply with your obligations can lead to protracted and costly disputes with either employees or the buyer.

 If you would like more information or advice on an employment issue, please contact Principal Sharlene Wellard.

This article was published in the Autumn edition of Pharmacy insights.