Buying and Selling a
Business practical advice on legal issues
The entitlement to long service leave
arises if an employee has been with the business for five
years. The employee will lose that entitlement after five
years and before ten years the employee resigns. The
employee will have the entitlement to be paid out their long
service leave if they are terminated after five years. The
employee is not entitled to actually take a long service
leave break until they are with the business for ten years.
The entitlement is just under one week per year of service.
You could go to this web site to calculate:
When does the clock start for an employee if the business is
sold? Is it day 1 when they were employed; or is it the
date the business is sold?
The answer is that the sale of the business does not re-set
the clock for employee entitlements the start date for the
long service leave entitlement remains the date they were
employed by the previous business owner.
This rule often strikes buyers of the business as unfair,
for this reason the seller of a business needs only credit
the buyer for long service leave entitlements of an employee
who has been with the business at least five years no
credit is available for example for employees who have been
with the business for four years, and in one years time
will come into the entitlement, which means that the
obligation will be fully borne by the buyer.