Termination of employment – your questions answered

Q&A

Termination of employment – your questions answered

Many of the questions posed to WorkplaceInfo ‘Ask an Expert’ involve termination of employment issues

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Many of the questions posed to WorkplaceInfo ‘Ask an Expert’ involve termination of employment issues. The following selection of Q&As covers the following issues:

Fixed term contract extended a bit?

Q. My question relates to the purchase of a business in Queensland. What would be the obligations to employees if the business purchaser employed the employees that were employed by the business he purchased (the employer entity is not being purchased, only the business)? 

The questions we are grappling with are :

1. Can the vendor assume the employee obligations ie pay out their leave entitlements, and then,

2. the employees are employed by the purchaser as new employees? 

What we are not sure about is if the purchaser will have to assume all the entitlements of the employees rather than have them start as new employees of the new employer entity.  

A. The period after the fixed term contract is set to expire should be covered by another written fixed term contract. If the employment is simply allowed to continue, the employee could argue that the contract was not for a fixed term. 

The new fixed term contract should be specific as to its term. 

If a series of fixed term contracts are strung together then there is an argument that the relationship is on-going.  This could arise, for example, if three plus contracts are structured in this way. This is a difficult question to be dogmatic about. The cases before the tribunals usually consider the particular facts. 

Consider, for example:

Fixed term employee excluded from unfair dismissal despite series of contracts

Employer fails to substantiate fixed-term contract

Paying out notice on resignation 

Q. My question relates to the purchase of a business in Queensland. What would be the obligations to employees if the business purchaser employed the employees that were employed by the business he purchased (the employer entity is not being purchased, only the business)? 

The questions we are grappling with are :

1. Can the vendor assume the employee obligations ie pay out their leave entitlements, and then,

2. the employees are employed by the purchaser as new employees? 

What we are not sure about is if the purchaser will have to assume all the entitlements of the employees rather than have them start as new employees of the new employer entity.  

A. Despite the acceptance of the two weeks notice by the employer, if the employee was required to give three weeks and the employer was also subject to the same requirement, there is a strong argument that the employer still has the onus, if paying in lieu, to pay three weeks notice.

Can an employer enforce a long notice period? 

Q. My question relates to the purchase of a business in Queensland. What would be the obligations to employees if the business purchaser employed the employees that were employed by the business he purchased (the employer entity is not being purchased, only the business)? 

The questions we are grappling with are :

1. Can the vendor assume the employee obligations ie pay out their leave entitlements, and then,

2. the employees are employed by the purchaser as new employees? 

What we are not sure about is if the purchaser will have to assume all the entitlements of the employees rather than have them start as new employees of the new employer entity.  

A. Three months notice from an employee may be considered excessive if tested.  The employer may choose to test the point and refer the employee to the contractual obligation.  Does the contract provide for forfeiture of pay to other monetary penalty if the full period is not worked out?  If so, this would incline the employee to fulfil the obligation.  If not, there are no obvious other options available to the employer. 

Probation - can it be extended? 

Q. My question relates to the purchase of a business in Queensland. What would be the obligations to employees if the business purchaser employed the employees that were employed by the business he purchased (the employer entity is not being purchased, only the business)? 

The questions we are grappling with are :

1. Can the vendor assume the employee obligations ie pay out their leave entitlements, and then,

2. the employees are employed by the purchaser as new employees? 

What we are not sure about is if the purchaser will have to assume all the entitlements of the employees rather than have them start as new employees of the new employer entity.  

A. We assume that three months has not yet passed. Employers should act within the probation period - ie decide what line of action you will take and act.  This usually means confirm the employment or end the relationship.  Attempts to extend a probationary period have not been treated kindly by industrial tribunals.  The view of the tribunals is that any unusual issues should have been considered before employment commenced and then the period of usually three months is sufficient to assess.   

If you extend the probation period it is likely that an industrial tribunal would regard the extension as of no effect. In other words, the employee would be entitled to access the unfair dismissal jurisdiction.

You may wish to keep the employee on and provide him with a warning as to where he needs to improve.  In this way you are managing the situation proactively. You would then have to give the employee an opportunity to improve - some reasonable time.  If you then dismiss the employee you would argue that you had followed proper procedure and treated the employee reasonably.  The employee could bring an unfair dismissal action, but you would have an argument that you had acted fairly

Purchase of business creates termination issues (Qld) 

Q. My question relates to the purchase of a business in Queensland. What would be the obligations to employees if the business purchaser employed the employees that were employed by the business he purchased (the employer entity is not being purchased, only the business)? 

The questions we are grappling with are :

1. Can the vendor assume the employee obligations ie pay out their leave entitlements, and then,

2. the employees are employed by the purchaser as new employees? 

What we are not sure about is if the purchaser will have to assume all the entitlements of the employees rather than have them start as new employees of the new employer entity.  

A. The issues you raise are essentially contractual.  The relevant contract to purchase the business could provide for the vendor to pay out accrued entitlements - but note the provisions re long service leave below.  

Queensland legislation is relevant in terms of long service leave. Sections 67-71 of the Industrial Relations Act 1999 [Qld] provides for certain leave entitlements to transfer from one employer to another when a transfer of a business occurs. For example, when a business changes hands or is sold and the new employer continues to employ any existing staff, responsibility for long service leave entitlements accumulated with the previous employer transfers to the new employer.

A 'transferred' employee is entitled to all long service leave accumulated for the total period of their employment - including long service leave accumulated with the previous employer. The transfer of entitlement also occurs if an employee is dismissed at the time the business changes hands or within the preceding month and is subsequently employed by the new employer within three months.

The position must be made clear to employees - ie what is being paid out and what is carrying-over (eg long service leave). As new employment contracts would be in issue if entitlements are paid out, the implications of this should be clear to employees and the employer. 

Ask an Expert service 

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