- Get free trial for practice areas as below
- Business
- Consumer
- Corporations
- Criminal
- Employment
- Family
- General Counsel
- Governance
- Immigration
- Intellectual Property
- Personal Injury NSW
- Personal Injury Qld
- Personal Injury Vic
- Personal Property Security
- Property
- Succession
- Work Health & Safety
- Tax
- Mergers & Acquisitions
- Banking & Finance
- Social Justice
- Cybersecurity, Data Protection & Privacy
- Insolvency
- Competition
- Purchase and sale of business
- Employees
Long service leave and personal/carer’s leave
Long service leave
Each state has long service leave (LSL) legislation. The entitlements vary but are usually between 10–13 weeks' LSL once 10–15 years' service have been completed. Pro rata entitlements are generally available once employees reach 5–10 years' service (or 7 years in Victoria, South Australia and the ACT). Some industrial instruments also provide for LSL, in similar terms to the state legislation.
On a transfer of employees as part of a sale of business, the time spent working for the vendor automatically transfers across. Accordingly, employees are entitled to LSL from the purchaser as if the purchaser had always been the owner of the business.
On settlement, there is usually an adjustment, whereby the purchase price is reduced by the liabilities for LSL taken on by the purchaser. For employees with less than 10 years of service (or 7 years in Victoria, South Australia and the ACT), there can be issues between the vendor and purchaser as to what adjustment should be made. This is because there may be no LSL entitlement if the employee leaves voluntarily before achieving a minimum period of service.
Victoria
On settlement, there is usually an adjustment, whereby the purchase price is reduced by the liabilities for LSL taken on by the purchaser. For employees with 7 years of service, there can be issues between the vendor and purchaser as to what adjustment should be made. This is because there will be no LSL entitlement if the employee leaves voluntarily before achieving 7 years of service.
Personal/carer’s leave
This covers:
- • sick leave; and
- • carer’s leave.
On a purchase of a business, any entitlements accrued with the vendor automatically pass to the purchaser under s 22(5), FWA. However, the purchaser may never have to pay such liability if the employee leaves without using up their leave entitlements accrued while working for the vendor. In practice, the entitlement of transferring employees to personal/carer’s leave is ignored, and not included in standard templates for contracts for sale of business.
See Long service and personal/carer’s leave.
Annual Leave
If a vendor and purchaser are associated entities within the meaning of the Corporations Act 2001 (Cth), the purchaser will be obliged to recognise annual leave entitlements accrued by employees while working for the vendor. This obligation does not apply if the vendor and purchaser are non-associated entities but can be agreed as part of the sale. In practice, annual leave is almost always transferred to the purchaser, rather than paid out on settlement, as employees generally prefer holiday entitlements rather than to receive cash and go without holidays. In that event, the purchaser will almost always seek an adjustment to the purchase price to reflect the liabilities it takes over.
