Notice to employee of transfer of business

Notice to employee of transfer of business

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Where an employer buys or sells a business, the sale may affect the entitlements of the employees already working for that business. The Fair Work Act 2009 (Cth) (Act) governs the majority of employment relationships in Australia, including setting out employee entitlements on the transfer of business.

It is therefore important to determine whether your particular transaction would be governed by the transfer of business provisions under the Act.

There is no transfer of business for the purposes of the Act unless at least one employee of the old employer moves to the business of the new employer.

Where the transfer of business provisions do apply to a specific transaction, it is worth noting the following:

·                There is no obligation on employers to notify their employees of a transfer of business. However, employees should be consulted if they are going to transfer to the new employer.

·                Generally where there is a transfer of employment, service with the old employer counts as service with the new employer. However, there are certain circumstances where this does not apply. When a new employer is not an associated entity of the old employer, the new employer may decide not to recognise a transferring employees’ previous accumulated service for annual leave or redundancy payments. The old employer may therefore be obliged to pay the affected employees their accrued entitlements.

This document should be customised to take into account the specific circumstances of the transfer of business transaction and how this affects the employee’s entitlements.

This document has been authored for LexisNexis and is authorised by Brooke Pendlebury, Principal, Pendlebury Workplace Law, Sydney; and Elise Margow, Principal, Legally Speaking.

This document is prepared with the assistance of Specialist Editor Justine Turnbull, Partner, Seyfarth Shaw Australia.