23 min read

Sale of business

Last updated August 2021

This chapter explains the legal obligations that may arise for employers when a business changes ownership, and outlines how to meet those obligations.

FW Act transfer of business provisions

If a sale of a business with employees gives rise to a change in the identity of the employer, the Fair Work Act 2009 (Cth) (FW Act) transfer of business provisions may apply.

Your obligation to observe the FW Act transfer of business provisions will depend on whether:

  • the identity of the employer in the business changes;
  • there is continuity of service;
  • the transferring employees will be performing the same work, i.e. transferring work; and
  • there is a transfer of assets.
Remember: The FW Act transfer of business provisions will only apply for national system employers and their employees.
Important: Transfer of business under the FW Act will not occur:
- in a ‘walk-out, walk-in’ situation, where there is no agreement or arrangement to transfer assets between the buyer and seller;
- if the transferring employees perform different work for the buyer, or the same work in connection with assets other than those purchased by the buyer; or
- the employees are ‘on-hired’ by the seller to the buyer for more than 3 months after the sale, before ultimately joining the business.

William sells his business to Marigold by way of a trade sale. William’s employees refuse to transfer their employment to Marigold. William agrees with Marigold to remain the employing entity for the business and to on-hire the staff to Marigold for the purposes of running the newly acquired business. The identity of the employer remains the same, and the FW Act transfer of business provisions do not apply.