In our last newsletter we pointed out what to be careful about when buying a farm or business. But if you are selling your farm or business there are many matters involving employees that could end up causing problems or costing money.

In effect, there will be a termination of the employment relationship with your staff, so as in any termination there are steps to follow.

Firstly, you need to give appropriate notice of the termination, the date of which will usually be the date of settlement of the sale.

If the purchaser agrees to take on your employees a couple of issues need to be addressed. Your employee’s personal leave accruals will transfer to the new owner. This is set out in the Fair Work Act and cannot be avoided. What happens with annual leave will usually be negotiated as part of the sale contract with the purchaser either taking on the leave accruals, with an adjustment in the purchase price for the value of the leave, or the seller will be required to pay out the annual leave, and the employees start with the new owner without any annual leave accruals.

If an employee has been with the seller for more than seven years long service leave accruals also need to be adjusted. The Commission has decided on a number of occasions that long service leave crystallizes on the seventh anniversary and that the employer at that time is obliged to pay for their share of the long service leave entitlement if the employee goes on to have the full ten years of employment, even after a change in employer.

As it is usually the seller’s solicitor that draws up the sale agreement the seller can dictate how annual leave and long service leave are to be dealt with under the contract.

And of course, just because you no longer employ these employees you should keep a copy of their employment records as well as providing appropriate copies to the purchaser.

Primary Employers Tasmania can assist in making sure that the employment matters on the sale of your farm or business are dealt with appropriately.