18 November 2016
Hi,
A client has purchased a business and the employees are transferring employees. The seller did not disclose that one of the employees had a WorkCover claim.
What are the buyer's obligations in regards to the WorkCover claim? Is the buyer liable for the claim?
There are a number of performance issues with the employee and the buyer would like to terminate him.
Kind regards
Thank you for the question.
Having agreed to the transfer of employment in the purchase transaction, the purchaser has all of the usual obligations of an employer including in relation to unfair dismissal and discrimination.
The purchaser is not liable for the workers compensation payments but is required to cooperate in any return-to-work regime.
Whether the purchaser has a claim against the vendor will depend on whether there has been a breach of a warranty (see, for example, clause 25(j) Uniform Contract for Sale of Business in the By Lawyers Sale of Business and Franchise publication) or the vendor has engaged in misleading or deceptive conduct in breach of the Competition and Consumer Act 2010, for example, in answers to pre-purchase due diligence questions or in answer to questions asked before the decision to offer employment was made.
Regards
Mentor
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