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Buying an existing business, one tab at a time

Tab 3 of 5 · Staff

Taking over staff when you buy a business

When a buyer takes on the seller’s employees to do the same work, the Fair Work Act can treat the change as a transfer of business, and that settles which agreement covers them and how much of their past service counts. Most entitlements carry the old service across; for a few, including annual leave and redundancy, a new employer that is not an associated entity of the old one can decline to recognise it, and the Fair Work Ombudsman says the old employer then pays.

General information about how the rules are written, not workplace or legal advice on any purchase. The official place to check is the Fair Work Ombudsman.

The test in the Act

Part 2-8 of the Fair Work Act 2009 deals with transfers of business. Section 311(1) sets out when one happens:

“There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied: (a) the employment of an employee of the old employer has terminated; (b) within 3 months after the termination, the employee becomes employed by the new employer; (c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer; (d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).”

Fair Work Act 2009, s 311(1), as compiled on 7 July 2026

The Fair Work Ombudsman boils that down to three things, all of which must happen.

The employee starts with the new employer within 3 months of their job with the old one ending.
Their duties are the same as before, or close to it.
There is a connection between the two employers.

The first of the Act’s four kinds of connection is about assets: under an arrangement between the two sides, the new employer owns or has the beneficial use of assets the old employer had, which relate to or are used in the transferring work. The Ombudsman’s examples of such assets are machinery and computer systems. The other connections are associated entities and work being outsourced, or brought back in. An employee who moves across this way is a transferring employee.

Which agreement covers them

The Act lists three kinds of “transferable instrument”: “(a) an enterprise agreement that has been approved by the FWC; (b) a workplace determination; (c) a named employer award.” If one of them covered the old employer and the employee just before the job ended, it covers the new employer and that employee for the transferring work, subject to any order of the Fair Work Commission.

In the Ombudsman’s terms, an employee under an enterprise agreement or other registered agreement keeps it until it is ended or replaced; one under an award can move to the new employer’s award, if it fits their job and industry. Staff the buyer hires fresh come under the award or agreement that applies to them; where none does, the transferred instrument may cover them too.

Service with the seller: what counts

The Fair Work Ombudsman divides entitlements into two groups. For most, the new employer must recognise time served with the old one; for some, it may not have to.

A summary in our own words of the Fair Work Ombudsman’s page on entitlements on a transfer of business. Its page, linked below, is the one to rely on.
EntitlementService with the old employerWho pays, per the page
Sick and carer’s leave, flexible working requests, parental leaveRecognisedNot applicable: the service carries across
Annual leaveCarried across, unless the employers are not associated entities and the new one decides not to recognise itThe old employer pays out the untaken leave
RedundancyA new employer that is not an associated entity can choose not to recognise it. The page adds that an employee who turns down a similar job with the new employer, one that counts their earlier service for redundancy pay, is not owed redundancy pay where the move would have been a transferThe old employer pays redundancy when the job ends
Long service leaveMay not count in some cases, which the page ties to these circumstances: no long service leave entitlement under a registered agreement at 31 December 2009, a replacement agreement made from 1 January 2010, and that new agreement saying the earlier service does not countNot covered by the page
Unfair dismissalMay not count, if the employers are not associated entities and the new employer says so in writing before the new job startsNot covered by the page
Notice of terminationIf the new employer later ends the job, only service with the new employer countsThe old employer gives notice, or pays instead, when the job with it ends

Notice, and who pays it

A transfer of business ends each employee’s job with the seller. The Ombudsman says the seller gives notice of termination or pays instead of notice, and if the transfer happens before the notice period runs out, still pays the rest of it.

The Ombudsman’s worked example, retold

An employee with five years’ service is given four weeks’ notice by the seller and moves to the new employer. Let go by the new employer within six months, the employee is owed one week’s notice, because only service with the new employer counts for that.

The checks that turn up wage and leave records are on the checks tab, the written promises about them on the contract tab, and the whole sequence on the home page.

What passes between seller and buyer

On the seller’s side, business.gov.au says which entitlements the seller pays depends on what was negotiated with the new owner, and any the new owner does not recognise, the seller pays.

Business Queensland puts staff and contractor contracts and the awards that apply among the documents to review, and names underpaid wages and unpaid superannuation as examples of what a seller’s warranties and indemnities can cover.