Employees’ Rights in Case of a Transfer of Undertaking
Where a transfer of employment occurs, the transferred employee’s service with their original employer will be counted as continuous service with their new employer. As such, any benefits acquired under the NES (such as annual leave) will be retained through the transfer of business and the employee’s service will remain continuous in the eyes of the law (even in circumstances where there has been a substantial period of inactivity). However, should the new employer fail to recognise these accrued rights, the original employer must pay out all entitlements accrued under the NES, which often times may only occur in the case of non-associated entities.
It is worth noting that there are a number of complexities to this process. Nevertheless, the underlying notion is to preserve the rights held under a bargained award or agreement where the work done is largely the same as it was under the previous employer. On this basis, the instrument is also transferred so as to cover the new employer as well.
Requirements for Predecessor and Successor Parties
For the entitlements to successfully transfer with the employee, the employee must have their employment first terminated with the old employer. Then, within three months following the termination, the employee is reemployed by the incoming business owner. The usual practice is for the new employer to issue, at the time of purchasing the business, a list that sets out those persons whom the business intends to reemploy. It is also a requirement that the work performed by the transferring employee is the same or substantially the same as the work previously performed.