Transmission of Business

    The facts:

  • New rules that transferring agreements and arrangements will bind the new employer for an indefinite period.

  • Transferred agreements will also apply to new employees of the business post-transmission.

  • New employers to honour terms and conditions of high income earners.


The Transmission of Business rules are some of the most surprising in the new Bill.

Currently, upon a “transmission of business”, workplace agreements and other arrangements transmit for 12 months to the new employer.  The most significant change is that pursuant to the Bill, these agreements and arrangements will transfer from the old employer to the new employer and apply for an indefinite period of time.

For the purposes of the Bill, a “transfer of business” occurs when a worker’s employment is terminated by the old employer, and the worker becomes employed by the new employer within 3 months, to do the same or substantially the same job and:

  1. some of the assets of the old employer (or old employer’s associated entity) transfer to the new employer (or new employer’s associated entity) that are used in connection with the transferring work; or
  2. the old employer outsources work to the new employer; or
  3. the new employer ceases to outsource work to the old employer and instead hires the transferring employees directly; or
  4. the new employer is an associated entity of the old employer.

Enterprise agreements that have been approved by FWA, workplace determinations and modern awards that cover a named employer are all “transferable instruments” for the purposes of the Bill.  After a transfer occurs the new employer and the transferring employees will be bound by the transferable instrument.

Transferable instruments may also apply to a new employee of the new employer who commences after the transfer.

FWA has the power to vary transferable instruments and make orders that they not apply to new employers.

New employers must also honour guaranteed annual earnings of high income employees.  This includes, where an employee is entitled to non-monetary benefits under an annual earnings guarantee provided by his or her old employer, and it is not practicable for the new employer to provide those benefits, then the employee will be entitled to the monetary equivalent of the agreed value of those benefits.

These new transfer of business provisions are set to have profound effect on many business sale agreements, as well as on large businesses who have numerous employing entities and who currently transfer employees between these entities without having to give regard to transmission of business provisions.