Transmission of business and WorkChoices 5/12/05

Analysis

Transmission of business and WorkChoices 5/12/05

[Note: The information in this article has been updated by Transmission of business and WorkChoices (3/7/2007). The protection of an employee's entitlements when a business, or part of a business, is sold or amalgamated or merged with another business, is an issue addressed in the WorkChoices legislation.

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[ Note: The information in this article has been updated by Transmission of business and WorkChoices (3/7/2007).]

The protection of an employee's entitlements when a business, or part of a business, is sold or amalgamated or merged with another business, is an issue addressed in the WorkChoices legislation.

Because of the proposed overhaul of the current workplace relations system, the Federal Government is addressing a number of areas which, historically, have created difficulty for both employers and employees. One such area has been the protection of an employee's entitlements when there is a 'transmission of business'.

This has been the subject of much litigation in the past with employees suffering a loss of redundancy entitlements for in certain cases. The WorkChoices legislation contains provisions which provide for the protection of the employee's entitlements in these circumstances and to recognise the new arrangements introduced by the legislation.

Overview

A number of circumstances relating to employment conditions can occur when a business or part of a business is sold, including:

No acceptance of employment with new employer: Where a business or part of a business transmits to a new employer, if no employee accepts employment with the new employer, then the awards or agreements will not transfer to the new employer.

In this situation, employees of the transferring business that do not transfer will be entitled to a pay out of all their relevant entitlements, such as annual leave and long service leave.

Acceptance of employment with new employer: In this circumstance, the awards, collective agreements and AWAs that cover the employees of the transferring business will transmit to the new employer.

The transmitted awards, collective agreements and AWAs will only apply to the transferred employees at the new business.

Where an employee accepts with the new employer, the new employer must provide them with information about their terms and conditions of employment.

The new employer and employees will be able to negotiate agreements, including varying existing agreements, to override the transferred agreements and awards.

Expiry of current arrangements: Collective agreements and AWAs transmitted to the new employer, as well as award provisions will have a maximum period of application of twelve months. After that period, the employees will be covered by whichever of the employer's instruments is capable of applying to them, eg. the employer's existing collective agreement or relevant award, or, if there is no such entitlement, the Fair Pay Conditions Standard.

Awards: Employees reliant on awards and the Fair Pay and Conditions Standard will have their classification wages as set and adjusted by the Fair Pay Commission, transmitted to the new employer. The twelve month limit will not apply to these wages. Conditions contained in the Fair Pay and Conditions Standard will apply universally, and so will not need to be transferred.

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