11 May 2018
Purchase of business - Adjustment of Long Service Leave
How are employee entitlements such as long service leave dealt with on the sale of business? What if my client, who is the prospective purchaser of the business, does not want to carry over the employees’ long service leave entitlements and instead wants to start from scratch? Is a special condition necessary?
Thank you for the question.
A new employer is not required to recognise transferring employee's service with the first employer for the purposes of long service leave. See our commentary and s 91(1) of the Fair Work Act 2009.
Both the By Lawyers Uniform Contract for Sale of Business and the Law Society REINSW Contract contain a clause dealing with adjustment of long service leave. If the purchaser elects not to recognise the service, the vendor must pay any entitlement to the employee on termination.
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