Business transfers: What responsibilities does a new employer have?

The following FWC case highlights the key responsibilities a new employer holds towards existing employees, following a transfer of ownership. The applicant commenced employment at a Shell branded service station, operated by MG Group Pty Ltd, in August 2019. In May 2020, ownership of the business was taken over by AAA Filling and Food Pty Ltd. 

The applicant worked fulltime, working 38 hours per week. Just over one month after the transfer, on 21 July, the applicant received a letter of engagement from the respondent, offering him 16 hours of work per week. The letter was backdated to 28 May. The applicant queried the terms of this engagement letter with his employer who assured him that, even though the letter said 16 hours per week, he would be offered more than this. The applicant’s hours of work continued at 38 for a few weeks, before dropping to 16.

On 4 September, the applicant expressed his displeasure towards the reduction of working hours. Later that same day, the applicant received a message from the respondent, giving notice of the applicant’s termination of employment.

The respondent asserted that the applicant had asked for his employment to be terminated. The respondent also submitted that no previous service with the former employer could be counted, and therefore the applicant had not met the minimum employment period at the time of his dismissal.

The Commission first considered the issue of the minimum employment period. It found that given the applicant remained in the same position, and the business’ operations were uninterrupted by the transfer, there was no evidence to support the respondent’s claim. The Commission also found that the time frame, in which the applicant’s employment was terminated on the same day he queried the reduced hours, raised sufficient concern that the two events were linked. Further, based on witness evidence, the Commission found the respondent’s submissions regarding the termination to be unsound.

The Commission noted the procedural unfairness of the dismissal, including the applicant’s lack of notice of, and opportunity to respond to, the decision. Ultimately, the Commission was satisfied that the dismissal was unfair and compensation of $6,785.10 was ordered.

Key Takeaways for HR:

• An employee’s service with a former employer counts towards the minimum employment period where the employee is a ‘transferring employee’ within the meaning of the Fair Work Act 2009 s 311
• Changes to employment conditions due to a transfer of ownership should be provided to employees at the outset of the transfer