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Workers At Risk When A Business Changes Hands

Workers at risk when a business changes hands

A 21 year-old Brisbane cook has lost his job and more than $9,000 in entitlements after the restaurant he worked for changed hands, and then closed down.

Employee advocates say the case highlights the risks faced by employees who work for companies that are suddenly sold to new owners.

The details

*Zac had worked for the themed restaurant located in Brisbane’s southern suburbs for more than two years, when it was sold to a different owner.

Despite being told by the new boss that “nothing is going to change”, he was immediately moved from being a permanent employee to a casual worker.

This meant that the redundancy and leave entitlements he had previously accrued were no longer acknowledged by the new owner.

Common practice

Miles Heffernan, Director of Litigation at IR Claims, said it is a common practice when there is a transfer of ownership.

“The new owner put all the workers on casual when some of them were permanent employees, and said to them, ‘take up what you are owed with the previous owner’,” he said.

According to Mr Heffernan, when a business changes hands, the original owner must inform their workers in writing if their existing conditions will not be acknowledged by the new owner.

“That would generally trigger a redundancy, and the worker can make a decision about whether they want to continue working for the new company, or take their money and run,” he said.

“But bosses are reluctant to write such letters, because they don’t want to have to write a cheque, and it may also jeopardise the sale of the business, because usually the incoming owner wants those staff to stay on.”

When a business changes hands, an employee can agree to a change in work conditions, but Zac maintains he never wanted to be made a casual.

His luck went from bad to worse, when after only a matter of weeks, the restaurant went bust and he was sacked.

Commission says worker should have been offered a redundancy

The Fair Work Commission found that Zac had technically consented to a change in his work conditions, including becoming a casual employee, but should have been offered a redundancy by the original owner.

The only way for him to recover that redundancy money is by taking action in the Federal Court.

As a casual employee, he also lost his right to make a claim for unfair dismissal.

The lesson

Mr Heffernan said all employees should be alert if they find out the business they work for is changing hands, because their employment conditions could be changed, including being made a casual, or even being put on a new probation period.

In addition, they could lose sick leave, annual leave and any redundancy payments that they might be entitled to.

“If a business is going to transfer, and there is going to be a change in employment conditions, and workers have been there more than five years, they have got to pay them at least four weeks notice – and if they don’t do that, they are not complying with the law,” he said.

“Secondly, they have got to tell the employees that the business is about to be sold, because if one of the conditions of sale is that the new owner will not acknowledge service with the old, there must be redundancies offered if they’ve got more than 16 staff.”

*name changed

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