Transmission of Business Bill passes with Democrats amendments


Transmission of Business Bill passes with Democrats amendments

A Bill allowing the AIRC to order that an existing certified agreement not bind a new business when a business changes hands passed through Federal Parliament this week, tempered by Democrat amendments.


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A Bill allowing the AIRC to order that an existing certified agreement not bind a new business when a business changes hands passed through Federal Parliament this week, tempered by Democrat amendments.

The Workplace Relations Transmission of Business Bill 2002 allows incoming and outgoing employers to apply to the AIRC to forgo existing certified agreements.

But Democrat amendments, agreed to by the Government, limit the circumstances in which the AIRC can make such orders.

The ALP and the Greens rejected the Democrat amended Bill, claiming it provided opportunities for employers to avoid their employment obligations.


Under the provisions of the Democrat amended Bill, the AIRC won’t be able to stop a new employer being bound by the existing certified agreement, unless the new employer and other parties agree to forgo the existing agreement.

In situations where the majority of employees want to remain under the existing certified agreement, but the new employer does not, the AIRC can still prevent the new employer being bound.

But the AIRC will have to be satisfied that:

  • any variation to employees’ circumstances does not disadvantage the employees;or
  • the variation is part of a reasonable strategy to manage a short-term crisis and to assist in the revival of the business.

A variation is deemed to disadvantage employees if it reduces the overall terms and conditions under the existing certified agreement (see previous story).

Seeking flexibility

Increasing business flexibility was important to the Democrats. ‘Individual circumstances differ for each business acquisition. Flexibility is needed,’ Democrat Workplace Relations spokesperson, Senator Andrew Murray said.

’It is self evident that the AIRC should have discretion in respect of transmission of employee conditions in business acquisitions, particularly when there are multiple industrial agreements in play - individual agreements, awards and certified agreements.

’What is important is that overall workers’ wages and conditions are not disadvantaged.

’Democrat amendments require the AIRC to take into account the terms and conditions of employment that will accrue to employees of the incoming employer, and also to apply a no-disadvantage test.’

The Federal Workplace Relations Minister Kevin Andrews agreed. ‘This will simplify some of the complexities of selling or transferring a business - or part of a business - when new owners are faced with competing and incompatible certified agreements.’

It meant greater ‘certainty when doing business, gives employers and employees more choice and flexibility and, most importantly, means more jobs’.

Definitional problems

But while the Government and the Democrats agreed on what the AIRC can and cannot order, they could not agree on the definition of the transmission of business.

The Democrats’ Murray said: ‘We were unable to gain agreement on a definition of transmission of business. However, we have gained agreement from the Government to a mid-2005 review of the courts’ and AIRC’s transmission of business definitions or criteria and their application to certified agreements.’ 

Bill unravels protections

ALP Senator Jacinta Collins told the Senate this week that the Democrat amended Bill did not go far enough to protect employment rights. She said the purpose of the transmission of business laws was to protect employment conditions contained in certified agreements on the sale or transfer of a business. She claimed the Governments Bill attempted to avoid these employment obligations.

She noted that a clearer definition of the transmission of business was necessary to help protect employment rights. ‘We feel that the existing definition does not take account of many business transfers where employees could reasonably expect to retain their conditions of employment.

Also, the bill does not take into account the unique and concerning circumstances in the maritime industry if the amendments moved on the previous occasion do not remain,’ she said.

Adding to the problem was the provision that allowed outgoing employers to apply to rescind existing certified agreements. ‘Labor also does not believe that an employer who is trying to sell their business should be able to alter their conditions of employment to make their business more attractive for sale.

‘We would not allow outgoing employers to have the same right to apply as incoming employers and, despite attempts by the Democrats to deal with this issue, we believe it still does not take into account the realities of the bargaining pressures that would apply at the time without additional protections.’

The Bill widens the door to phoenix companies

The Greens fear the Bill will lead to business practices that remove entitlements and undermine union workforces.

The use of shelf companies and phoenix companies is a well-known tactic employed to avoid responsibility to employees. The passing of this type of legislation widens the options for this kind of industrial cheating of Australian workers,’ Greens Workplace Relations spokesperson Kerry Nettle said.

She rejected the Democrat amendment that a majority of workers were required to agree to a change if it didn’t disadvantage employees overall. ‘What about a significant minority of workers who are opposed to a changing or watering down of conditions on the transfer of a business?’

She also opposed the Democrat amendment allowing businesses to abrogate certified agreements in the event of a short-term crisis. ‘The Greens can imagine employers queuing up to argue the case that their business is in a short-term crisis and therefore should be treated differently,’ she said.

Similar laws already exist in relation to awards.

See related articles: Legislation news briefs...Transmission of business back in business, Transmission of business appeals to go ahead and Transmission of business interrupted.


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