This article delves into how business acquisitions affect employees in Australia, including essential areas such as job security, redundancy, contractual obligation, and workplace laws under the Fair Work Act.
Understanding Mergers & Acquisitions
Mergers and acquisitions are the takeovers of businesses. Where two businesses merge into one, it is a merger. Where a business takes over another business, it is an acquisition. Employees usually find themselves in the dark during this time as companies restructure and redefine roles.
The future for employees depends on the following:
The acquisition structure
The intentions of the new employer
The conditions of current employment contracts
Legislative protection under Fair Work Australia
Employee Rights During Business Acquisitions
Continuity of EmploymentWhen a business is acquired, employees may either:
Retain their employment under the new ownership, or
Be terminated due to restructuring or redundancy
If the new employer takes over the existing business structure, they may decide to keep employees under their original terms and conditions. However, they are not legally required to do so unless specified in employment contracts or enterprise agreements.
Redundancy and TerminationOne of the greatest fears for staff during an acquisition is redundancy. If the new employer chooses not to keep some positions, the affected staff can be entitled to redundancy pay under Australian employment law.Employers are required to give notice and pay compensation under the Fair Work Act 2009, unless exemptions exist (e.g., small businesses with less than 15 employees).
Amendments to Employment ContractsAn acquisition can result in:
Amendments to employment contracts
Salary, benefits, or job detail changes
Changes to workplace policies and conditions
If an employee is presented with a new contract by the acquiring company, they must take their time to thoroughly read the agreement to see that their rights are not compromised.
Fair Work Act and Employee Protections
The Fair Work Act 2009 of Australia provides for fair treatment for employees in business acquisitions. Some of its significant provisions are:
Protection against unfair dismissal
Right to redundancy pay (where relevant)
Protection of accrued leave entitlements (if ongoing employment)
Minimum notice periods for dismissal
For legal advice, employees can check the Fair Work Ombudsman website to learn about their rights and choices.
Employer Responsibilities and Obligations
Notification of EmployeesEmployers are required to provide acquisition information to employees, such as:
Whether their positions will be maintained
Any modifications to employment agreements
Anticipated transition schedules
Lack of clear communication may result in conflicts and legal issues.
Transfer of EntitlementsIf employees are transferred to the new employer, some entitlements will transfer, including:
Annual leave
Long service leave
Personal leave
Superannuation and bonuses might need to be negotiated, however.
Offering Redundancy PackagesIf an employer makes jobs redundant as a result of acquisition, they need to offer redundancy packages in proportion to years of service. Employees should check the Fair Work Ombudsman's redundancy calculator to see what their entitlements are.
Potential Challenges for Employees
Uncertainty and Job SecurityM&A transactions result in an aura of uncertainty, commonly creating anxiety and tension for workers. Proper and timely communication from the employer will eliminate conjecture and apprehension.
Cultural and Work Place AlterationsThere usually is new management brought with various workplace cultures, procedures, and standards. The employees are sometimes resistant to adjust, particularly when the takeover brings considerable restructuring.
Prospective Reduction in Salary or Role ChangesIn certain circumstances, employees could be requested to take a salary cut or be assigned alternative posts under the new employer. Without these modifications agreeing to them, employees are at liberty to bargain or consult their lawyers.
Employee Rights and Legal Assistance
The following entities are available to aid employees being subjected to termination, redundancy, or contract modification:
A business acquisition can bring uncertainty and change, but employees in Australia have legal protections under the Fair Work Act. Whether an employee retains their job, faces redundancy, or negotiates a new contract, understanding workplace laws is crucial.
If you’re affected by a business acquisition and need expert guidance, seek legal advice or visit the Fair Work Ombudsman for support.
