Most employees: protection in “restructuring” situations

Who do the arrangements below apply to?

The rules below apply to most employers and employees in restructuring situations.

Note that the rules below do not apply to employees in the following types of employment:

• cleaning services and food catering services in any place of work
• laundry services for the education, health, or age related residential care sector
• orderly services for the heath, or age related residential care sector
• caretaking services for the education sector.

These “specified groups of employees” have different arrangements.

What are “restructuring situations”?

“Restructuring” in relation to most employees is where their employer:

• sells or transfers the business to another person; or
• contracts another business to perform work that was being performed in-house.

What rights and obligations do employers and employees have?

From 1 December 2004, new employment agreements must contain an “employee protection provision”. An “employee protection provision” is a clause in an employment agreement that aims to provide employment protection for employees in the above restructuring situations and that deals with:

• the process the employer will follow in negotiating with a new employer about the restructuring as it affects employees;
• the matters relating to the affected employees that the employer will negotiate with the new employer, including whether the affected employees will transfer to the new employer on the same terms and conditions; and
• in the event that there is no transfer of employment, the process which will be followed at the time of restructuring to determine what entitlements, if any, are available.

The exact level of protection will depend on the agreement reached between the employer, employees and where present their unions, but the requirement to negotiate such a provision means the parties need to actively think about the possibility of a change of employer situation. Employee protection provisions, like other employment conditions, must be negotiated and agreed.

Employment agreements entered into after 1 December 2004 will have to contain an employee protection provision.

Employment agreements in existence before 1 December 2004 will have to be altered to include an employee protection provision. This alteration must be made by the earliest of:

• 1 December 2005; or
• when the employment agreement is next amended; or
• any restructuring of the employer’s business.