The FWA provides a different scheme to deal with the transfer of
employment rights and obligations if there is a "transfer
of business" and a new employer takes on employees of the
The new transfer of business rules extend coverage to a wider
range of transactions including outsourcings and company
reorganisations. The 12 month limitation on transferring
instruments is removed so transferring instruments now continue
until they are terminated or replaced. A transfer of business will
An employee changes employer;
The work the employee does for each employer is the same or
There is a particular connection between the old and new
employers (ie either a transfer of assets used in connection with
the work, or an outsourcing, or an insourcing or where the two
employers are "associated employers".
Transfer – Associated Entities Or
Where an employee transfers between associated entities (related
bodies corporate) with no more than a three month break between the
two employments or because he or she is a transferring employee in
a transfer of business, service with the first employer counts as
service with the second, but although any break does not count as
service, it does not break continuity of service.
Service based entitlements that have been taken while with, or
paid by the first employer (notice, annual leave,
personal/carer's leave or long service leave, redundancy pay)
are deducted off the entitlement with the second employer.
If the transfer is between non-related entities, the second
employer is not required to recognise prior service for annual
leave or redundancy pay. If the transfer is between non-related
entities, and the new employer informed the employee in writing
that the period of service with the first employer would not count,
the employee starts a new "minimum employment
Service for the purposes of parental leave or requests for
flexible working arrangements does not carry to the second
Industrial instruments that could transfer with the business
include Enterprise Agreements, named employer respondents modern
Awards (other modern Awards would continue to apply on their terms)
and guarantees of annual earnings for high income employees. Where
the new employer does take on employees, the application of the
"transferred instruments" is generally limited to those
employees, plus any new employees the employer employs, where the
workplace is instrument-free. This means that transfer of business
may cause some employers to inherit Enterprise Agreements from
other workplaces that will then apply to new employees that are
employed post the transfer of business.
Donaldson Walsh will be running a series of Workplace Relations
& Employment Law Seminars, during August and September 2009.
For further information or to register please go to What's on
at DW section of the Donaldson Walsh website.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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