Staff are at the heart of any NDIS business. They're also one of the most legally complex elements of a sale.
When an NDIS business changes hands, both the seller and the buyer take on specific obligations under Australian employment law — obligations that don't disappear just because a deal has been signed. Get these wrong and the consequences can include unpaid entitlement claims, unfair dismissal applications, or a buyer who unknowingly inherits liabilities they never agreed to.
This article walks through the key employment obligations that apply in an NDIS business sale, covering both the Fair Work Act 2009 (Cth) and the NDIS-specific worker screening requirements that sit on top of general employment law.
What the Fair Work Act Says About Business Sales
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When a business is sold and employees move from the old employer to the new one, the transfer of business provisions under the Fair Work Act 2009 (Cth) are triggered. These provisions apply when an employee's contract with the old employer ends, the new employer employs them within three months, they perform substantially the same work, and there is a connection between the two businesses — typically through the transfer of business assets.
The core principle is that the new employer must recognise the employee's prior service with the old employer for most entitlements. This is not optional. It applies regardless of whether the buyer wanted to start fresh.
This has direct consequences for NDIS business buyers, who may be acquiring staff with years of accrued entitlements they need to factor into the purchase price or negotiate as part of the deal structure.
What Entitlements Transfer — and Who Pays
Understanding exactly which entitlements transfer — and who is responsible for paying them — is essential for both sides of an NDIS business sale.
Personal and carer's leave — Accrued personal leave transfers to the new employer automatically. The new employer must recognise prior service and honour it. There is no option to opt out.
Annual leave — Annual leave accrued with the old employer generally carries across to the new employer. However, if the buyer is not an associated entity of the seller, they can choose not to recognise it — but only if they notify the employee in writing before the transfer. If the buyer elects not to recognise accrued annual leave, the seller must pay it out to the employee at the time of transfer. Buyers who fail to give written notice in advance may find themselves responsible for entitlements they expected the seller to cover.
Redundancy entitlements — The new employer must recognise prior service for redundancy purposes unless they are not an associated entity of the old employer and they give the employee written notice that prior service will not be recognised for redundancy. If the buyer does not recognise prior service for redundancy, the seller may be required to pay redundancy pay to the employee on termination. However, an employee who turns down a comparable job offer from the new employer — one that recognises their prior service — is generally not entitled to redundancy pay.
Long service leave — Long service leave is governed by state and territory legislation as well as awards and enterprise agreements, which can vary. In some cases, the new employer may not be required to recognise prior service for long service leave. Sellers should not assume their long service leave liability disappears on settlement — legal advice specific to the relevant state or territory is strongly recommended.
Parental leave and flexible working requests — Service with the old employer must be recognised by the new employer when assessing eligibility for parental leave and requests for flexible working arrangements under the National Employment Standards (NES).
The Seller's Obligations Before Settlement
Sellers have specific obligations to fulfil before or at settlement, regardless of whether employees are transferring to the buyer.
The Fair Work Act requires the old employer to provide employees with written notice of the transfer of business — even if those employees are continuing with the new employer. Sellers must also finalise all outstanding pay, notice periods, and any entitlements that are being paid out rather than transferred.
Sellers should also provide the buyer with complete and up-to-date employment records for all transferring employees. Under the Fair Work Act, the buyer is required to keep those records for seven years. Providing incomplete or inaccurate records can create downstream disputes and potential liability.
Sellers who are considering terminating employees before settlement — rather than having them transfer — need to be aware that this can trigger redundancy pay obligations and notice requirements under the NES. Taking employment action close to settlement without legal advice is one of the more common mistakes in NDIS business sales.
The Buyer's Obligations at and After Settlement
Buyers are not required by law to take on every employee of the old business, but when they do, they step into a set of legal obligations from day one.
Beyond honouring the entitlements discussed above, buyers should issue new employment agreements to all transferring employees before or at settlement. This provides clarity for both parties about the terms of their employment with the new employer, any entitlements being recognised, and any that are not — and ensures proper written notice has been given where required.
Buyers should also conduct their own employment-related due diligence before signing the sale contract. This includes reviewing all employment contracts, identifying Award coverage, checking for any enterprise agreements, reviewing leave balances and long service leave exposure, and confirming whether any employees are subject to ongoing performance or disciplinary processes.
These items should form part of the broader NDIS provider due diligence process, not an afterthought at settlement.
NDIS Worker Screening: A Separate Obligation for Buyers
In addition to Fair Work obligations, NDIS business buyers who are operating as a registered NDIS provider must ensure that all workers in risk-assessed roles and key personnel roles hold a current NDIS Worker Screening clearance.
According to the NDIS Quality and Safeguards Commission, key personnel — those who make decisions about NDIS supports and services — must hold a valid clearance. Workers whose normal duties involve direct delivery of NDIS supports to participants are also in risk-assessed roles requiring a clearance.
NDIS Worker Screening clearances are portable across employers and states. A worker who holds a valid clearance from their time with the seller can use that clearance with the new employer — they do not need to reapply. However, the new employer must verify and link those workers in the National Worker Screening Database. This is the buyer's responsibility from the date of settlement.
Buyers who take over an NDIS business and fail to verify worker screening for transferring staff are operating at compliance risk from their first day. The NDIS Commission can and does take action where registered providers cannot demonstrate their workforce meets screening requirements.
Why Getting This Right Matters
Employment obligations in an NDIS business sale are not a formality. Accrued leave liabilities across a team of ten to twenty support workers can represent a significant sum — one that can materially affect the commercial outcome if it isn't accounted for in the purchase price or the sale terms. Worker screening gaps can put a buyer's registration at risk before they've even had a chance to settle in.
The NDIS provider sale process works best when both the buyer and the seller engage employment and legal advisers early, not at the eleventh hour. A well-run sale addresses staffing obligations clearly in the sale contract, ensures employees are properly informed, and reaches settlement with no loose ends on either side.
Working with experienced NDIS business brokers means these issues are identified during the sale process, not discovered afterwards.
*This article provides general information only and does not constitute legal or employment advice. Employment obligations in a business sale are complex and fact-specific. You should seek advice from a qualified employment lawyer or HR specialist before making any decisions about staff in connection with an NDIS business sale.*
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