transfer of a business ownership

The transfer of business provisions under the Fair Work Act 2009 deals with situations where a business is transferred from one company to another. The result may be that an award, agreement, or another type of ‘transferable instrument’ follows the transfer and becomes binding on the new employer. Therefore, when an employer buys or sells a business, the sale may affect the employment and entitlements of the employees already working for the business.

The new employer must recognise an employee’s service with the old employer when working out their entitlements in respect of:

  • sick and carer’s leave
  • request for flexible working arrangements
  • parental leave

There are exemptions where the new employer may not have to recognise some entitlements:

  • redundancy, in which case the old employer will have to pay redundancy on termination
  • annual leave, in which case the old employer pays out any untaken accumulated annual leave
  • long-service leave if the employee is not entitled to long- service leave under a registered agreement at 31 December 2009, or if a replacement agreement was made after 1 January 2010 and the new agreement says that service under the older agreement does not count towards long-service leave
  • unfair dismissal, when the employee is a transferring employee, the businesses are not associated entities and the new employer informs the employee before employment starts that the service with the old employer would not be recognised
  • notice of termination, as the transfer ends an employee’s position with the old employer. The old employer therefore has to give notice of termination or provide payment instead of notice

Important note: The Fair Work Amendment (Transfer of Business) Act 2012 states an employee’s terms and conditions of employment will transfer from an old public sector employer to a national system employer if there is a connection between the two.

For more information download the transfer of business fact sheet at: > Employee entitlements > When businesses change owners > Employee entitlements on a transfer of business

impact of a merger and acquisition

Mergers and acquisitions, depending on how well they have been managed, can have either a positive or negative impact on the employer brand. When not handled well, employees can find themselves working in roles they did not ask for in a company they did not choose. In these cases employees may consider leaving the organisation sooner than they might otherwise have done.

The announcement of a takeover, merger or acquisition effectively starts an emotional journey for employees, which may see shock, anger, grief, denial, resistance and uncertainty. Research shows organisations that communicate with staff regularly through the merger and acquisition process experience greater levels of acceptance and engagement about the change.

Another key consideration is cultural change. Unfortunately in many plans for a merger or acquisition that end with business integration, cultural integration is not handled well. This means while some back office functions are merged and operational changes are made, the cultural aspects of change are not addressed and different parts of the business may continue operating in different ways. In terms of employer brand, this lack of unifying feeling means there is no longer one overall brand – which has implications for how employees engage with the organisation.

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