continues to be employed at the hotel. Tim’s overall service at the hotel up until 20 January 2022 will be 7 years and 3 months, as he was a transferring employee and his service with the previous owner counts for the purposes of calculating entitlements.
WHAT IS A TRANSFERABLE INSTRUMENT? If a transferring employee was employed under an industrial instrument with the old employer such as an enterprise agreement, that industrial instrument will transfer across to the new employer as part of the transfer of business process and is referred to as a transferable instrument.
WHO IS A TRANSFERRING EMPLOYEE? An employee will be considered a “transferring employee” as part of the transfer of business process when: • Their employment with the old employer has terminated; and • They are employed by the new employer within 3 months after the termination; and • The work they perform for the new employer is the same, or substantially the same, as the work they performed for the old employer. Example: Transferring employee Tim has worked as a casual food and beverage attendant for a hotel in Adelaide since 20 October 2014. In January 2022, his employer sold the Hotel to new owners. As part of the transfer of business in January 2022 Tim was offered employment by the new owners which he accepted, and he
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A transferable instrument will transfer over from the old employer to the new employer when the new employer employs at least one of the transferring employees and that employee was employed under the transferable instrument immediately prior to transfer. Any other transferring employees who were employed under the transferable instrument prior to transfer will also remain under the conditions of the transferable instrument. Such transferring employees will continue to be covered by the transferable instrument until such time as it is terminated or a new industrial instrument such as a new Enterprise Agreement commences. In the absence of the old employer having a transferable instrument such as an enterprise agreement in place, the applicable Modern Award (e.g. Hospitality Industry (General) Award 2020 (HIGA)) would apply. Example: Transferable Instrument ABC Pty Ltd (‘new employer’) has purchased the leasehold of the Sunshine Hotel. The old employer of the Sunshine Hotel employed 25 employees, 20 of whom were employed in
accordance with the Sunshine Hotel Enterprise Agreement 2012 (‘Sunshine Hotel Agreement’). Through the transfer of business process the new employer employed 15 of the employees that were employed with the old employer immediately prior to settlement. All of those 15 employees were employed under the Sunshine Hotel Agreement. The Sunshine Hotel Agreement will therefore transfer over to the new employer as a transferable instrument.
WHAT HAPPENS TO NEW NONTRANSFERRING EMPLOYEES OF THE NEW EMPLOYER? When the new employer commences operating as the new owners and they engage new employees (non-transferring employees), the non-transferring employees will be employed under the terms of the applicable Modern Award (e.g. HIGA) or another enterprise agreement. The non-transferring employees will not be covered by a transferable instrument unless the new employer makes an application to the Fair Work Commission (FWC) and the FWC makes orders for the transferable instrument to also cover any new non-transferring employees. WHAT HAPPENS TO EMPLOYEE ENTITLEMENTS WITH A TRANSFER OF BUSINESS? Generally, where there has been a transfer of business, the service of the transferring employee with the old employer will be recognised for the purposes of calculating entitlements. However, under the Act, there are exceptions to this. For example the new employer may decide not to recognise a transferring employee’s service with the old employer for the purposes of calculating annual leave, redundancy entitlements and unfair dismissal.
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