By Elisha Radwanowski, B Com (HRM & IR)

As we have explored here:  there are many things to consider when purchasing or selling an operational business, particularly in circumstances where some or all of the employees are going to work in the new business.  This weeks HR Highlight will explore more things to consider when transferring a business.

Standard Considerations

When buying a business that you intend to run with some or all of the current staff there are standard items to consider.  Will you be taking on the entitlements for the employees or will you be starting fresh?  Will employees be terminated from the old business and offered employment with the new business?  Will all assets and stock move to ownership of the new business in entirety or will some be removed?  Are some of the assets under control or ownership of a third party?

Special Considerations

In addition to these standard considerations there is a need to go deeper on some issues.

If the entitlements are being paid out by the old business, are you as the purchasing business satisfied that the entitlements that have been applied accurate?  If you have not attempted to receive asusrances from the selling business that the entitlements have been applied and paid accurately you may be responsible for any shortfall.

If there are employees that are transferring do you, as the purchasing business, have any visibility on performance issues that may have been raised with individual employees in the past?  While this is a matter for a case by case approach, it is worthwhile understanding if there are any ‘problems’ in the employment pool that may need special attention in the probation or transition period.

If there are third party owned or controlled assets involved in the transfer is there a requirement for you as the purchasing business to add those third parties as named individuals to any insurances and visa versa?

When Selling A Business

When you are the party that is selling the transferring business all of these considerations get flipped.  There is still a requirement for there to be clear understandings regarding staff to ensure that your business is protected.  If all staff are transferring then redundancy will not apply, however, if only some of the staff are transferring there may be redundancies applicable in some circumstances.  Similarly if the employee entitlements are transferring over to the new business, the selling business should have recognition of this on an employee by employee basis, to combat any queries that may arise in the intervening years.  Typically a letter or contractual clause that notes the employees name, start date, calculation date, leave type and dollar amount carried into the new business.

Here to Help

ACAPMA members are reminded that the ACAPMA Employment Department has a series of resources from Quick Reference Guides to template letters and investigation and reporting checklists that can assist with ensuring compliant and consistent responses in this area, and can access the advice and support of the ACAPMA Employment Professionals.

HR Highlights are things to consider, implement and watch out for in your business.

They are provided as general advice and you should seek further advice on your situation by  emailing it’s free for members.

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