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.
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 (eg. machinery or computer systems)
- the employers are 'associated entities', 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 agreement or other registered agreement, remain covered by the same agreement as they were before transferring (this will continue to apply until the award or agreement stops operating or is replaced) or
- if they were covered by an award, switch to the award covering the new employer.
Any new employees that you engage will be covered under the applicable modern award or another enterprise agreement. If there is no modern award or enterprise agreement that covers the new staff, then the transferable instrument may also apply to the new employees.
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