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Buying a business? Ensure you do your homework prior

A recent media release from the Fair Work Ombudsman sounded a warning to potential buyers of existing businesses to ensure that they double-check the terms and conditions of their new employees.

Of particular focus is ensuring that employees' minimum hourly rates, applicable allowances and conditions are in order prior to signing the contract of sale.

In the event that the new business owner continues with the existing employees, from the day they take over, any people issues now become the responsibility of the new owner.

Prior to purchasing a business, it's important to conduct an HR Audit which covers things like:

  • Pay rates and allowances
  • Award coverage
  • HR Policies and Procedures
  • Any performance issues

An example sited by The Fair Work Ombudsman detailed how an employee had been under-paid a total of $19,622 for the 3 and a half years since the new owners  took over the business, 

The new owners were unaware of the annual increases to the Award rates and had not passed these on.

It's important for all potential and existing business owners to ensure they are paying at least minimum Award rate and any applicable allowances.

Information in HR Advice Online guides and blog posts is meant purely for educational discussion of human resources issues. It contains only general information about human resources matters and due to factors such as government legislation changes, may not be up-to-date at the time of reading. It is not legal advice and should not be treated as such.


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