Part 2-8 of the Fair Work Act deals with the legal implications where ownership of a business is transferred from one employer to another, most typically, but not always, when a business is sold as a going concern. This used to be called a transmission of business, but the Act introduces a more contemporary expression for the transaction, namely a transfer of business.
The issue can be complicated legally not just because of the commercial nature of the transaction which results typically from a vendor wanting to dress up the value of the business, often by decreasing liabilities on the balance sheet, and the purchaser wanting to drive down the negotiated price and of course the expenses of the business from day one but also by the value of the employees’ accrued entitlements and length of service.
You do not have to be a business genius to comprehend the implications for the vendor and the purchaser in this sometimes tense environment and the potential risks which this poses for both the purchaser and the employees.
The Fair Work Act seeks to protect employee rights and entitlements in this situation by preserving accrued entitlements and protecting continuity of service for the purpose of calculating those entitlements.