When businesses change owners
Change of business owners often occurs where there is a sale of business. It is also known as a transfer of business. This can affect an employee's entitlements.
On this page:
- What's a transfer of business?
- What covers employees during a transfer of business?
- Tools and resources
- Related information
What's a transfer of business?
A transfer of business is when all of the following happen:
- an employee begins working for the new employer within 3 months of ending their job with a previous employer
- the employee's duties are the same or nearly the same as they were for the previous employer
- there is a connection between the previous and new employers.
An employee that moves from the old employer to the new employer in a transfer of business is called a transferring employee.
What's a connection between employers?
There may be a connection between employers when one or more of the following occurs:
- the old employer sells some or all of the businesses assets to the new employer (for example, machinery or computer systems)
- the employers are associated entitiesAssociated entities are businesses or other bodies that are connected to each other in some way. For example, when 1 business owns or controls the other business for the purpose of a transfer of business. Section 50AAA of the Corporations Act provides a full definition. , meaning they are related bodies corporate or one has some controlling interest in the other
- the old employer outsources the work the employee does to the new employer, or
- the new employer stops outsourcing work to the old employer.
What covers employees during a transfer of business?
When businesses change owners, a transferring employee can either:
- if they were covered by an enterprise award, enterprise agreement or other registered agreementA document between an employer and their employees covering employment conditions. A registered agreement must be approved by and registered with the Fair Work Commission. Examples of registered agreements include enterprise agreements (including single and multi-enterprise) and greenfields agreements. , remain covered by the same instrument as they were before transferring (if covered by an agreement, this will continue to apply until the agreement is terminated or is replaced), or
- if they were covered by an award, switch to the award covering the new employer, if it covers their job and industry.
New employees
Any new employees that you engage will be covered under the applicable award or another enterprise agreement. If there is no award or enterprise agreement that covers the new staff, then the transferable instrument may also apply to the new employees.
Source reference for page: Fair Work Act 2009 sections 22, 307–316
Tools and resources
- Setting up a performance system checklist
- Australian Securities and Investments Commission
- Find an enterprise agreement - Fair Work Commission
