The transmission of a business can have various affects on the rights of employees who have their employment transferred from the vendor to the purchaser. A key question concerns whether these employees are required to serve a new unfair dismissal qualifying period if they are employed by the purchasers (new employers). If they are, then they do not have jurisdiction to bring an unfair dismissal claim should they be dismissed during the qualifying period.

New employers find a new qualifying period provides flexibility and a chance to test pre-existing employees within a new business model. Conversely, employees transferring to a new employer (especially those who were long standing in the previous business) see the imposition of a qualifying period as exposing their job security to unjustified risk.

The Australian Industrial Relations Commission recently confirmed that employees are required to serve a new unfair dismissal qualifying period when employment with the new business begins.

In Aged Care Services Australia Group Pty Ltd [2008],¹ a Full Bench of the Commission confirmed that employees are unable to bring unfair dismissal claims against a new employer if they are yet to serve out a six month qualifying period required under the Workplace Relations Act 1996 (Cth), following the transmission of a business.

Aged Care Services Australia Group Pty Ltd (Aged Care Services) dismissed employees (who were taken on from the previous employer) only three months after the transmission of business. These employees had at least 12 months of experience in the previous business.
Although Aged Care Services offered the employees (through its letter of offer of employment) an assurance that there would be no change to the employee’s entitlements on transmission of business, the Commission found that this did not amount to a waiver of the employees’ qualifying period.

Interestingly, Commissioner Lewin dissented finding in favour of the employees arguing that written communications between the employees and Aged Care Services gave rise to a conclusion that there was an agreement to remove the requirement to serve a new qualifying period.

This ruling highlights that employers are able to dismiss employees within six months of a business transmission where no prior agreement to reduce the qualifying period has been entered into between the parties.