Almost nothing happens to it. What happens to my EOR contract if I sell the business is a question with a short answer: an employer of record agreement is a service contract between two companies, the people under it were never your employees, and no accrued Australian entitlement sits against them for a buyer to price. You assign it, terminate it, or the buyer signs a fresh one.
The question founders should be asking is about the other half of the team.
The employer of record model behaves very differently in due diligence to a payroll you run yourself. Most people find that out during the transaction.
Your Australian payroll is where the money actually leaves
The Fair Work Ombudsman's guidance on employee entitlements on a transfer of business states that where the old and new employers are not associated entities, the new employer “can decide not to recognise an employee’s service with the old employer”. Where that happens with annual leave, the old employer pays out the untaken leave. The same choice is available on redundancy pay.
Read that again as a seller. The buyer gets to decide, and you fund the decision.
How much is sitting there?
Under the National Employment Standards, full-time and part-time employees accrue four weeks of annual leave a year. On a salary of $95,000, four weeks is $7,308. Ten Australian staff each carrying a year of untaken leave is $73,080 payable at completion if your buyer declines to recognise service. That is cash, it leaves on the day, and it comes off your proceeds rather than theirs.
Ten people engaged through an employer of record carry none of that. The entitlements do not vanish. They are the EOR's liability in the EOR's jurisdiction, funded monthly as you go. Outstaffer publishes Employer of Record from $195 per employee per month, so ten seats is $1,950 a month. A buyer can keep paying it, or stop.
What transfers, and who writes the cheque
The honest counter-argument is that this cuts both ways. A buyer who wants the offshore team and cannot get the service agreement assigned has to re-contract from scratch, and those seats are not theirs to keep. Continuity of an employment relationship you do not own is continuity you cannot promise. If retention of a specific Manila-based analyst is central to the deal, a buyer will say so.
It is still the smaller problem. Re-papering a service agreement takes a fortnight. Funding a leave payout takes cash you were planning to bank.
What about the team employed by the EOR?
They keep working. Their employer has not changed, their service is continuous with the entity that employs them, and their in-country entitlements are unaffected by who owns your shares. Whether the provider novates the agreement or requires a new one is a commercial conversation, not a legal cliff. The same logic runs in reverse when people move off an EOR and onto an entity you set up yourself.
Read the change of control clause before you read the term sheet
Most service agreements have one. Some require consent to assign, some terminate automatically, some are silent and therefore assignable. Know which you signed before a buyer's lawyer finds out first. A provider who can walk away at completion is holding a card nobody budgeted for.
Check the notice period too. A ninety day exit on a team of ten belongs in the model alongside what a Philippine placement costs once statutory on-costs are counted.
Get advice on your own arrangement. Transfer of business rules turn on facts that vary deal to deal.
Related reading
What should you check this week?
Three things: the assignment clause in your provider agreement, the notice period, and the total untaken leave balance across your Australian team. The third is the number that moves a purchase price.
Sellers who have done this once build the offshore side as a service line from the start, because a cancellable monthly cost is easier to hand over than a balance sheet entry. If that is your direction, set up a role and see how the structure behaves before a buyer makes you look at it under time pressure. The EOR contract will survive your sale. Your leave provision will not.
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