Insights Paper | Employment Law

Employment Law in Purchasing a Business: A Reference Guide

Key Points

  • Employment law is complex, but an important consideration in a business sale.
  • A purchaser should investigate the merits of potential transferring employees, and the vendor’s past compliance with employment-related laws, rather than rely on contractual vendor warranties.
  • Offers of employment should be in writing, and a purchaser may reset the minimum employment period for any person who accepts the offer.
  • Any person made an offer of employment may reject it.
  • Small businesses will not be liable for redundancy pay. Other businesses will need to consider making offers of employment on comparable terms.
  • The purchaser will be liable for most legacy leave entitlements of transferring employees, and the purchase price adjusted for that fact.
  • After settlement, the purchaser must exchange information with the transferring employees and also government departments.

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