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Are you purchasing a business? Does the business have good employees? Do you want to transfer the existing employees to your new business?

We’ve set out the basic steps which need to be taken to transfer employees from an existing business to your new business.

If you are looking to purchase a business, and you know that you want to retain some of the employees, you need to decide which employees you want and which ones you don’t. For the employees that you want, you should make an offer, usually done by way of a letter, to these employees. In your letter, you should set out a certain date you require a response by.

After the employees have agreed, or not agreed, to transfer to your new business, all the employees which agree to be transferred need to be set out in the sale of business agreement. It should be clearly set out in the sale of business agreement, which employees are being transferred, and the leave entitlements of each employee, including, without limitation, any accrued annual or long service leave. This needs to be included in the sale of business agreement because the vendor i.e. the person selling the business to you is responsible for payment of these entitlements up to the date of completion.

It is important that these entitlements are correct and clearly set out. This will enable the lawyers involved in the sale of business, to adjust the purchase price accordingly, so that you, the purchaser, is not paying for the leave entitlements of employees prior to the date of the completion of the sale. Depending on the number of employees and the length of time that employees have been working for the business, this could be a very significant amount, and could result in a significant drop in purchase price once the entitlements have been adjusted for.

If you have any further questions regarding a sale of business, or transfer of employees in a sale of business, get in touch with one of our business lawyers today!


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