What Happens to Motel Employees When a Newcastle Accommodation Business Is Sold?

Employees can be one of the most important operational parts of a motel, hotel or accommodation business.

They can also become one of the areas requiring the most careful preparation during a sale.

For a Newcastle accommodation-business owner, staff arrangements should not be left until the week before settlement.

A Business Sale Does Not Make Employment Obligations Disappear

The Fair Work Ombudsman explains that a transfer of business can occur where an employee starts with the new employer within three months of finishing with the old employer, performs the same or substantially the same work, and there is the required connection between the businesses. Fair Work Ombudsman

Whether those rules apply to individual employees depends on the transaction and circumstances.

Sellers and buyers should therefore obtain appropriate workplace-relations advice rather than assuming every staff member automatically transfers.

Prepare Accurate Employee Information

Australian Government guidance says that where employees will transfer with a business, the seller should provide the new owner with up-to-date records and information about contractual, leave, financial and legal obligations. business.gov.au

For an accommodation business, that might involve reception, housekeeping, maintenance, management, food-and-beverage or administration staff.

The buyer will usually need to understand the workforce required to continue operating.

Work Out Who Is Responsible for Entitlements

The sale contract should address which employment obligations are retained by the seller and which are dealt with as part of the transaction.

Business.gov.au also notes that sellers remain responsible for making required employee payments when selling or closing a business. business.gov.au

Those calculations should be handled with accounting and employment-law advice.

Employment Instruments Can Matter

The Fair Work Ombudsman explains that the employment instrument applying after a transfer may depend on whether employees were covered by an award, enterprise agreement or another registered instrument. Fair Work Ombudsman

This makes it important to know how existing employees are actually employed before information is presented to a purchaser.

Protect Employee Privacy During Due Diligence

Staff information can contain personal information.

The Office of the Australian Information Commissioner advises vendors covered by the Privacy Act to consider de-identifying information and generally avoid providing personal employee records to prospective purchasers unless disclosure is appropriately permitted. OAIC

Aggregated employee-entitlement information can often be used during earlier due diligence instead.

Plan Communication Carefully

Employees are also people whose livelihoods may be affected by the transaction.

The timing and content of staff communication should be planned with professional advice and coordinated with the buyer where appropriate.

A poorly managed announcement can create unnecessary uncertainty in an operating accommodation business.

Frequently Asked Questions

Do motel employees automatically become employees of the purchaser?
Not necessarily. The Fair Work transfer-of-business rules depend on the facts of the transaction and each employee's circumstances. Fair Work Ombudsman

Should a buyer receive complete employee files during early due diligence?
Not automatically. Privacy obligations should be considered and sensitive information may need to be limited or de-identified. OAIC

Selling a Motel or Accommodation Business in Newcastle?

Norton’s Resort Brokers can coordinate the commercial sale process while owners obtain the appropriate employment, legal and accounting advice required for the transaction.

Steven Norton — 0488 496 277
Lawrence Norton — 0415 279 807
Nortons.re@gmail.com

Disclaimer: General information only. It is not employment, legal, accounting, privacy, taxation or financial advice. Employment rights and obligations depend on individual circumstances.