From One Owner to Another: Employee Entitlements in the Sale of Business

Transfer, transfer, transfer! What is the difference between a transfer of business, transferring employee and transfer of employment?

Where a business is sold, what happens to the employees? Employment may be ended, in which case notice of termination and redundancy entitlements may apply, otherwise employment may continue or transfer to the “new” employer.

Where a new employer wishes to offer employment to existing employees to perform substantially the same work they performed for the old employer, and they are employed by the new employer within three months of their termination, there may be a transfer of business.

These employees will then be considered transferring employees and accrued employment entitlements of transferring employees generally continue.

How are employee entitlements dealt when a transfer of employment occurs?

Depending on the transaction, the seller and buyer may have different obligations under employment (and related) laws to recognise service and accrued employment and leave entitlements.

The way in which employee entitlements are dealt with depends on a number of factors including whether the buyer wishes to recognise previous service of transferring employees, the timing of re-employment, and the corporate relationship between the old and new employer, namely, whether or not the two are associated entities.

For further information about your rights and obligations with respect to employee entitlements in a transfer of business, please contact our Employment, Discrimination and Equality Law team.