Employment - Transferring Employee Letter

When to use this document?

You should use this document if you are purchasing the assets of another business and want to continue to employ the vendor’s employees in the same (or substantially the same) position that they had with the vendor.

The purpose of this letter is to inform the employee that you want to keep employing them and whether their service with the vendor will be recognised by you for the purpose of calculating service-based entitlements.

If you purchase a business and are intending to take on some or all of the employees, it will be worth getting Law Central Legal (08 9476 4999) to check the provisions of the sale contracts that concern the employees and to make sure your interests are protected.

In most cases when you just purchase the shares in a business, there is no change to the employment of the employees, but we recommend that you get legal advice to confirm this.

If you are taking on employees from the vendor, make sure that you obtain and retain their employment records.

This document is suitable for one employee only.

Checklist is not available for this document.

Sample is not available for this document.

Vendor Details
• Entity’s name vs Trading Name
Settlement Date
• What is the settlement date?
Conditions of Employment
• What is an enterprise agreement?
• Do I have to recognise an existing enterprise agreement?
• What is a common law contract?
• Do I have to recognise the common law contract?
• Can I introduce new common law contracts?
• What if I want to pick more than one option?
Recognition of service-based entitlements
• Recognising service for calculating annual leave
• Recognising service for giving notice
• Recognising service for calculating redundancy pay
• Recognising service for protection from unfair dismissal
• What about other service based entitlements?

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Vendor Details

• Entity’s name vs Trading Name

  The entity's name is the name of the incorporated entity you are purchasing; that is the Pty Ltd name. The entity may also have a trading name. For example, George William Pty Ltd might trade as Hair by George. In this case, the entity’s name is George William Pty Ltd and its trading name is Hair by George.

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Settlement Date

• What is the settlement date?

  This is the date on which your purchase of the assets on the business will be finalised.

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Conditions of Employment

• What is an enterprise agreement?

  An enterprise agreement is an agreement between a company and some or all of its employees who were employed at the time the agreement was made.

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• Do I have to recognise an existing enterprise agreement?

  If you purchase the assets of a business which has an enterprise agreement and then employ the employees of that business to do the same work (or substantially the same work) you need to recognise the enterprise agreement. If you would like advice on how you may be able to offer employment on different terms and conditions, speak with Law Central Legal on 08 9476 4999.

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• What is a common law contract?

  A common law contract is an agreement between a company and an individual employee about the terms and conditions of employment. A common law contract may be used in conjunction with a modern award or an enterprise agreement or, if no modern award or enterprise agreement applies to the employee, the contract will be the only instrument that governs the terms and conditions of employment.

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• Do I have to recognise the common law contract?

  No; however, if the terms and conditions on which you employ the employee is substantially different, this may affect the vendor’s obligations to its employee.

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• Can I introduce new common law contracts?

  Yes; however, if the terms and conditions on which you employ the employee is substantially different, this may affect the vendor’s obligations to its employee. We recommend you speak to Law Central Legal on 08 9476 4999 if you want to change the terms and conditions of employment.

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• What if I want to pick more than one option?

  This is a simple letter and only allows you to pick one option for the Conditions of Employment.
  
  If you would like to include a reference to more than one option, say for example continuing common law contracts and an enterprise agreement, then we recommend you get legal advice from Law Central Legal on 08 9476 4999.

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Recognition of service-based entitlements

• Recognising service for calculating annual leave

  Do I have to recognise the employee's service with the vendor for the purpose of calculating annual leave?
  
  No. If you are not going to recognise prior service with the vendor, the vendor will be responsible for paying accrued annual leave to the employee when his or her employment with the vendor terminates.

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• Recognising service for giving notice

  Do I have to recognise the employee's service with the vendor for the purpose of giving notice?
  
  No, as long as the vendor has given the employee notice (or payment in lieu of notice) that his or her employment with the vendor will terminate.

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• Recognising service for calculating redundancy pay

  Do I have to recognise the employee's service with the vendor for the purpose of later calculating an employee's entitlement to redundancy pay?
  
  No, as long as you informed the employee in writing that you would not do so.

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• Recognising service for protection from unfair dismissal

  Do I have to recognise the employee's service with the vendor for the purpose of calculating the employee's continuous service for protection from unfair dismissal?
  
  No, as long as you informed the employee in writing that you would not do so.

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• What about other service based entitlements?

  You will have to recognise the employee's service with the vendor for the purposes of personal leave. The only exception to this is if there is an enterprise agreement that allows for the cashing out of personal leave on termination of employment. If this applies to the business you are buying, we recommend that you contact Law Central Legal on 08 9476 4999.
  
  You will have to recognise the employee's service with the vendor for the purposes of parental leave.
  
  You will also have to recognise prior service for the purpose of long service leave; however, long service leave provisions vary between the States so contact Law Central Legal on 08 9476 4999 if you have concerns about your long service leave obligations.
  

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This document has been prepared by the law practice Law Central Legal

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