What is a transfer of business?
A transfer of business is when a business changes hands and certain employee entitlements and workplace instruments can carry over to the new employer.
A transfer of business happens when employees move from one employer (the old employer) to a new employer in connection with a sale, outsourcing, or restructure of the business. The Fair Work Act 2009 sets out when this counts as a transfer and what carries over.
When a transfer of business occurs and a transferring employee becomes employed by the new employer, certain workplace instruments — such as enterprise agreements — and accrued entitlements like annual leave and continuous service can transfer across. The rules determine which terms bind the new employer and whether prior service is recognised.
Key facts
- •It applies when employees move to a new employer because the business changes hands
- •Enterprise agreements and other instruments can transfer to the new employer
- •Accrued entitlements such as annual leave may carry over
- •Continuous service can be recognised by the new employer
- •The rules are set out in the Fair Work Act 2009
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Leave Entitlements CalculatorFrequently asked questions
Do I keep my entitlements if my employer is sold?
Often, yes. In a transfer of business, accrued entitlements like annual leave and recognition of your continuous service can transfer to the new employer, along with certain workplace instruments such as enterprise agreements.
Does my service start from zero with the new employer?
Not necessarily. In a transfer of business the new employer may have to recognise your prior continuous service, which affects entitlements like leave and redundancy. The specific rules depend on the circumstances of the transfer.
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General information and estimates only — not legal, financial or tax advice. Always check your specific award, agreement or contract, or a qualified professional, before you rely on the result.