Long Service Leave from previous entity

I understand LSL (and other leave types) entitlements carry over when business is sold. I am Director of a Pty Ltd Co (B) which trades under a “Trading Name”. I bought both the Pty Ltd Co (B) and “Trading Name” and agree existing employees entitlements are now my responsibility.

My question relates to an employee who was employed by the Trading Name, but which was owned by a different Pty Ltd Co and then sold to Pty Ltd Co B.

Completely different Co, Directors etc. legitimate sale of Trading Name.

My records show employee started at Pty Ltd Co B in 2006 which is where I am calculating Leave entitlements from.

New TFN declaration as at that date and previous owner’s record says started 2006.

Employee started at Trading Name several years earlier and believes Leave entitlements started then.

WageLine advises too far back to know - “Work it out between yourselves!”

Thoughts?

 

A trading name cannot employ anyone as it is not a legal entity. They would have been employed by the company. Did you buy that company?

 

Thanks Terry. No, we bought the Tradiing Name.

 

Hi MIlie. Firstly the legal entity employer is the Pty Ltd, not the trading name. From your information it sounds like the employee was already employed by Pty Ltd Co, when this entity was purchased by Pty Ltd Co (B) in 2006. Is this correct?

From your initial post: "My question relates to an employee who was employed by the Trading Name, but which was owned by a different Pty Ltd Co and then sold to Pty Ltd Co B."

It sounds like the employee started at Pty Ltd Co (B) in 2006, but was employed by Pty Ltd prior to (B) purchasing the business.

If this is the case, the long service leave will be payable from the original employment date with the business, which was owned at the time by Pty Ltd Co. The change of ownership (Pty Ltd Co to Pty Ltd Co (B)) does not interrupt the long service leave service period.

 

LSL and leave entitlements transfer with the employees to a new owner or a new structure / busienss if there is re-engagement as part of the sale / transfer. Employees arent made redundant and then re-engaged in most cases. But if they were no entitlements may have transferred. A new employment offer could mean a new engagement.

eg Fred works for Coles Supermarkets. He started in 1989. He worked for Coles New World Pty Ltd for years before the entity became Coles Stores Pty Ltd and then Coles Supermarkets Pty Ltd. Then it became part of Wesfarmers Ltd and quite lately it became Coles Group Ltd. Fred will have all entitlements based on his original empplyment.

Persons / entities buying a business should always seek legal advice and ensure employee entitlements are part of the change of ownershipand clearly addressed and communicated. This comes with associated liabilities for prior taxes or debts (perhaps), employee entitlements and may even trigger new liabilities for things like redundancy pay and maternity leave where a former employer may have been excluded.

Fair Work can assist a workplace dispute about this. It may assist if each employer was a constitutional corporation ie Pty Ltd. . Otherwise state lsl laws may prevail in some cases.