Questions & Answers - Transfer of business

Question:

At present our company X exists and we have a number of people seconded to us from three other businesses. We are currently looking at setting up a new company Y and initiating a transfer of business, where these employees would be offered the same benefits to transfer to the new company Y as employees (no longer seconded). One of the three seconding companies is looking at offering early retirement packages to any of their employees 55 and over. What I am trying to find out is if they take the early retirement package, can they then come and work for our Y company doing the same / similar role they took their early retirement package from? If so, is there a compulsory period they cannot work for? Are there any other outstanding implications around this type of scenario?

Answer:

There is nothing in the Fair Work Act that would prevent this. If they join Y company within 3 months of their employment with X company ending, Y company would be obliged to recognise continuity of service for the purposes of minimum statutory entitlements to leave, notice and severance pay (although employees could not 'double dip').

Question:

A government agency has announced that they will no longer outsource work of a specific site and intends to directly employ those employees by transfer of business.

They have also announced that they intend to offer employment to all employees using the classification system of the Agency and employ the staff under the Agency's Enterprise agreement and the existing Collective Agreement which has a nominal expiry date 4 months after the intended date of transfer.

My understanding is that the 'new employer' MUST transfer the existing agreement and the staff on that agreement first, and then when they are, the employer can then attempt to alter the arrangements by applying to cease the Collective Agreement.

There are considerable differences between the existing Collective Agreement and the Government Agencies' Agreement well in the favour of the Collective Agreement. Ceasing the Collective Agreement would disadvantage all employees currently covered by it.

What is required specifically, and how do you deal with a future employer who only has the intention to employ staff under their agreement?

Answer:

If it is a transfer of business situation then old employer's EA will bind the agency in respect of transferring employees. However, the agency could apply to the FWA for an order that the agency's EA operate in lieu of the old employer's EA. If the agency has not sought that order, a transferring employee could apply to FWA for an order that the old employer's EA does apply.

In determining the issue FWA will take into account what the transferring employees want, the relative disadvantage suffered by those employees under either EA, how long each EA has to run, and which EA is more consistent with the agency's operations.

In your circumstances these factors obviously work both for and against the case for the agency's EA to prevail.

Question:

An incorporated association has a non-union collective agreement negotiated & approved under Work Choices. It has recently changed its governance structure & company status & is now a company limited by guarantee (& has a new ABN). What is the status of its agreement? Is it covered by the transfer of business pro-visions of the FWA i.e. does the agreement stay in place as all the employees are transferred to the new company?

Answer:

The agreement is covered by the transfer of business provision in the FWA and will continue to operate. Further, assuming that the employees continue to do the same or substantially the same type of work, the employees will continue to be covered by that agreement.