A ‘transfer of employment’ occurs when an employee moves from one employer (the old employer) to another employer (the new employer) within three months of a transfer of business and performs substantially the same work for the new employer as they performed for the old employer.
A transfer of employment can also occur where an employee moves from one employer (the old employer) to another employer (the new employer) who is an associated entity of the old employer within 3 months of ending employment with the old employer.
A transfer of business can occur where one of the following connections between the old employer and the new employer exists:
- a transfer of assets
- outsourcing
- insourcing
- where the two employers are associated entities.
When there is a transfer of employment, the period of service with the old employer will generally count as service with the new employer, and the employee will keep any annual leave balance they had accrued with the old employer.
However, where the employers are not associated entities, the new employer can decide not to recognise an employee’s service in relation to annual leave with the old employer. In such cases, the old employer will be required to pay out the employee’s untaken accrued annual leave.