jmhWhen a new owner takes over a business, at what point is he considered to have ’employed’ the existing staff?

In a recent case before the Fair Work Commission, a café in Melbourne was taken over by a new owner, SK, on 10 September 2012. No information was given about future employment conditions but the manager encouraged staff to be patient and understanding with the new owners. There was no new paperwork in respect to employment, no change to shifts, no change to wages, and no request for taxation declarations.

Annual leave entitlements were paid out at the time of the transfer of business.

At that time, one of the workers, B, had been employed on a permanent part-time basis for more than 12 months. He continued working on the usual basis until 22 September, when he received a text message from SK which read: ‘Hi B, it is S, I just want to tell u that I’m not happy to have u with our staff members anymore, I will contact u very soon for ur wages.’

Unfair dismissal proceedings were commenced by B against SK even though B had only been employed by SK for about two weeks.

During the proceedings, SK submitted that he felt a need to reduce the number of employees and observed their performance over a two-week period to choose who should stay and who should go. He said that after watching the workers he ‘didn’t select B for my staff’.

SK added: ‘I didn’t dismiss him, for he was not my employee, I simply chose not to select him for my business.’

Employed ‘before and after’

The Fair Work Commission found that B was employed in the business before the transfer and after the transfer.

The Commission determined that because B had not been informed in writing that the period of service with the old employer would not be recognised, the period of service with the first employer counts towards the period of continuous service.

Accordingly, the Commission found that B did in fact have more than 12 months of continuous service and was protected from unfair dismissal.

The Employment Law team at Everingham Solomons is well equipped to assist you with all your workplace relations issues because Helping You is Our Business.

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