What Happens To My Employees When I Sell My Business? (2025 Updated)

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When you sell your business in 2025, one of the biggest questions is what will happen to your employees. This depends on several factors, such as whether the purchaser is a ‘non‐associated entity’ and the exact nature of your staff’s employment arrangements. With the latest updates to Fair Work regulations and employment law, it’s more important than ever to ensure you get every step right.

You’ll need to officially let your employees go when you sell your business. From there, they can choose to either accept or reject the new employment offer from the buyer. Either way, you must formally terminate their employment with you – always in line with current Fair Work guidelines and any applicable employment contracts. For example, ensure that your written notice complies with the terms set out in your contract, as explained in What is a Contract?.

Terminating Employment

During a transfer of business, it’s crucial to review several key steps before you officially terminate your staff’s employment. Some of these steps involve discussions with the new employer, so it’s essential to clearly understand your obligations under the latest 2025 regulations.

Step 1: Written Notice

Before you let them go, you must give your employee written notice of their termination of employment. The minimum notice period usually depends on the length of their service with you. You can read more about the current notice requirements on the Fair Work website here. It is also advisable to confirm that your notice aligns with any contractual requirements – as highlighted in our article What is a Contract?.

Generally, the notice should include:

The reason for the termination of employment (in this instance, you would explain that the business is being sold to a new employer)
The date on which their employment ends
The applicable notice period
Whether payment in lieu of notice will be made

Step 2: Employment Termination Payment

You may be required to compensate your employees for the loss of their job, which could include their redundancy payment. In today’s regulatory environment, Employment Termination Payments (ETPs) are calculated based on current tax and superannuation rules applicable in 2025.

An ETP, which is a lump sum paid upon termination, may encompass payments for:

Unused sick leave or unused rostered days off
Payments in lieu of notice
Gratuity
Loss of job compensation
Redundancy payments
Early retirement schemes (when they exceed the tax-free limit)
Market value adjustments related to the transfer of property

An ETP does not include:

Unused annual or long service leave
Superannuation benefits
The tax-free part of a genuine redundancy payment
Foreign termination payments

For further guidance on ensuring your payments comply with current legislation, check out our Employee Termination Documents Suite. Terminating an employee isn’t always straightforward, and our team is here to help if you need expert advice.

Will Your Employees Be Working For The Buyer Of Your Business?

If your employees do accept the offer of new employment, and decide to work for the buyer, you’ll need to ensure that the following aspects are properly managed in accordance with the latest 2025 standards.

Documents To Give To The New Employer

Before your employee begins work with the new employer, you must provide all relevant documentation. This includes updating records to reflect any changes in employment status in line with 2025 best practices.

Up-to-date employee records: Provide the new employer with details such as name, nature of employment (e.g. part-time or full-time), commencement date, and any applicable ABN.
Notice of termination: As highlighted earlier, you must terminate the employment with your business formally by providing written notice and processing any due payments.

The extent of the payments you are liable to make depends on the new employer’s decision to recognise the employee’s service with you for entitlements.

Pay Entitlements When Transferring Employment

Generally, an employee’s service with the old employer is carried over to the new employer for calculating pay entitlements, including the transfer of time off in lieu balances, unless the new employer decides otherwise. For a comprehensive overview of these issues, see our article on How Important is an Employment Contract?.

Note that if you have already paid out their accrued entitlements, these will not be transferred again. However, if the new employer does not recognise prior service, then you remain obligated to settle any accrued entitlements such as redundancy or annual leave.

If you are the new employer and unsure of how these entitlements should be handled, it is important to seek clarity. Our updated guidelines and expert consultations on employee transfer entitlements can help ensure you comply with 2025 regulatory standards.

Transferable Instruments

In some cases, employees can transfer certain rights from their old employer to the new one via a transferable instrument. Recent updates for 2025 have clarified that these instruments may include:

An agreement
A workplace determination
A named employer award

Such instruments can also cover flexibility arrangements and a guarantee of annual earnings, ensuring the smooth transfer of accrued entitlements until either the old employment is formally terminated or a new instrument applies.

What Does The New Employer Need To Do?

If you’re the new employer, your obligations will differ. You have several options regarding the transfer of employee entitlements. Specifically, if you are not an associated entity, you can decide not to offer the existing employees employment. In this instance, they would receive a redundancy payment from the old employer rather than a transfer.

If you do offer employment, you may choose either to:

Recognise the employee’s service with the old employer
Not recognise some aspects of the employee’s service concerning certain entitlements

Recognition Of Service

If you decide not to recognise the employees’ service with their old employer, then you will need to ensure that the old employer pays out any accrued entitlements such as annual leave and redundancy upon termination. However, you must still recognise essential entitlements like sick and carer’s leave, parental leave, and the right to request flexible working arrangements.

Alternatively, if you choose to recognise employees’ service, their accrued entitlements will transfer to you – making you responsible for payments including annual leave, redundancy, long service leave, unfair dismissal claims, and notice of termination. Typically, if the new employer’s terms and conditions mirror those of the old employer, such recognition is more straightforward. If not, and you are a non‐associated entity, it might be safer not to carry these entitlements over.

Regardless of your decision, you must provide your new employees with the Fair Work Information Statement. This document details employees’ rights under the National Employment Standards and must be supplied before or immediately after they start work.

Next Steps

Managing your employees during a transfer of business comes with numerous obligations, but it doesn’t have to be overly stressful. With 2025’s updated guidelines and the ever-evolving legal landscape, taking a proactive approach is key. Whether you are the old or new employer, ensuring that all documentation is current and compliant is critical. For additional resources, you might find our Business Startup Checklist and other guides on our website invaluable.

Given the complexity of these changes and the potential impact on employee entitlements, it is a smart move to seek professional advice. Our experienced team at Sprintlaw is up-to-date with all the latest legislative amendments and is ready to help you navigate these transitions smoothly. You can arrange a free consultation by calling 1800 730 617 or emailing team@sprintlaw.com.au.

Additionally, many recent clients have benefited from our tailored advice on employment transfers – ensuring that all steps, from written notices to recognising accrued entitlements, are handled precisely. Staying informed and proactive in today’s regulatory environment will save you time, money, and potential legal hassle.

Rowan Gardoce

Rowan is the Marketing Coordinator at Sprintlaw. She is studying law and psychology with a background in insurtech and brand experience, and now helps Sprintlaw help small businesses

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