What happens to staff entitlements when you sell your business?
Leave balances, service and the choices you and a buyer make about your team. A plain-language overview to discuss with your adviser.
By This article covers employment law matters. It's general information to help you ask better questions, not advice for your situation. Velaro isn't a law firm, registered tax agent or licensed financial adviser. Please check anything important with a qualified adviser before you act.
In short
- Staff are offered employment by the buyer; they don't transfer automatically in an asset sale.
- Annual leave carries across, or you pay it out if the buyer doesn't recognise prior service.
- Long service leave has its own state rules. In Queensland it generally transfers with the employee.
For many owners, the team is the hardest part of selling. Beyond the conversations, there are practical questions about accrued leave, length of service and who is responsible for what. The rules are set nationally under the Fair Work system, and your solicitor or accountant should confirm how they apply to your sale. Here's an overview so you know what to ask.
Employees don't transfer automatically in an asset sale
In most small business sales, the buyer purchases the business assets and offers employment to some or all of the staff. Employees can choose whether to accept.
If the business is sold by selling the company itself, the employer stays the same entity, so employment generally continues as it was.
Recognising service
When staff move to the new owner, the buyer can often choose whether to recognise their previous service. That affects things like leave accrual and, in some cases, redundancy entitlements.
This is usually negotiated between the seller and buyer and reflected in the price.
Accrued leave
Where service is recognised, accrued annual leave generally moves across with the employee and becomes the new employer's responsibility, and the price is often adjusted to reflect it.
Where service is not recognised, the seller may need to pay out certain entitlements. The detail matters, so get advice before agreeing.
Long service leave
Long service leave is governed by state law, which in Queensland has its own rules for transfers of business. Ask your adviser how long-serving staff will be treated.
This is often significant for businesses with loyal, long-term employees.
Talk about intentions early
Ask a buyer early which roles they intend to keep and whether they plan to recognise service. Their answers affect your staff, your price and your peace of mind.
The Fair Work Ombudsman website has a helpful section on transfer of business that's worth reading before you meet your adviser.
Your checklist
What to do next
- List staff, roles, start dates and leave balances
- Ask your adviser how a transfer of business applies
- Agree with the buyer whether service will be recognised
- Reflect leave liabilities in the price
- Check long service leave obligations
- Plan how and when staff will be told
Example
A pest control business had four technicians with long service. The buyer agreed to recognise their service, and the price was adjusted for accrued leave. All four accepted offers from the new owner.
An illustrative example, not a real client or transaction.
Questions owners ask
Do my employees have to work for the buyer?+
No. They are offered employment and can choose whether to accept.
Who pays accrued leave?+
It depends on whether service is recognised and what you agree. Get advice specific to your sale.
Where can I read more?+
The Fair Work Ombudsman website has information on transfer of business, and your solicitor can apply it to your situation.
Sources and further reading
- Fair Work Ombudsman: Entitlements on a transfer of business
- Fair Work Ombudsman: When businesses change owners
- Fair Work Ombudsman: Redundancy pay and entitlements
- Business Queensland: Transferring long service leave
Information checked against these sources as at October 2026. Rules and thresholds can change, so check the current position with your adviser.
Important
This article is general information only. It doesn't take your personal circumstances into account and isn't financial, legal, tax, employment or valuation advice. Velaro Group is a buyer of businesses. It isn't a business broker, licensed financial adviser, registered tax agent or law firm, and it doesn't act for sellers. Please get advice from your own accountant, solicitor or financial adviser before making any decision. Read the full disclaimer.
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