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What Rights Do Employees Have When an Employer Is Selling the Business?

What Rights Do Employees Have When an Employer Is Selling the Business?

What are your employees entitled to if you sell the business?

14th December 2018

As an employee you don’t want to be left out of the loop. This is especially the case when the employer is selling the business. Therefore, an employee’s rights will vary based on whether they are casual or part/full time and how long they have worked there. There are some optional things that a new owner may decide to uphold. Therefore, the rights of employees are limited situation of a new owner.

Read on to find out what rights employees have when the owner sells the business.

Employment termination payments

Employees can usually claim an employment termination payment (ETP). This ETP is a lump sum payment that the ATO will tax. Hence, the types of payments inside a ETP include:

  • Unused sick leave
  • Unused rostered days off
  • Payments for loss of super that you could have earned

There are many more that depend upon if the employee is eligible or not. Furthermore, some important things to note include the lower tax rate for ETP than income. However, the employer must provide the ETP within 12 months of terminating you.

Taxes to be finalised

When it comes to taxes both the employer and the employees need to finalise them. The main taxes to be aware of are fringe benefits and PAYG. There is also superannuation and the tax from the employee termination benefits.

Notification

The legal obligations for notifications are slim. As a result, the owner will generally not need to notify the staff that there is a change of ownership taking place. Although, once there is a new ownership, then they need to provide a new fair work information statement. If you are unsure as an owner as to what additional obligations you might have, then you can always check with a business sale lawyer.

Carry over employees rights

Furthermore, if the business changes ownership, the employees may claim a transferable instrument. This is just a collection of rights that employees have. Whether an employee can claim these rights depends upon what the new direction of the business is. The actual rights are things like employment contracts and modern award wages. Likewise, the new owner may count the previous work and add it to the existing annual and long service leave. However, there are exceptions to this. Then, depending upon what the new owner recognises or doesn’t, there may be a right to redundancy pay.

Employees Rights Summary

The new owner must recognise sick/carer’s leave, parental leave and request for flexible working arrangements. As mentioned earlier, the rights which new owners can dismiss are annual leave, redundancy, long service leave, unfair dismissal and termination notification.

Conclusion

If you are deciding to sell a business then you should check that you are aware of what taxes and payments you may owe. Likewise, as an employee you can claim employee termination payments. The new owner may also decide to carry over some of your previous rights as well.

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Author
Justin Pasqualino

Justin is a legal intern at Lawpath as part of the content team. He is currently studying a Bachelor of Laws and a Bachelor of Economics at UTS.