News & Events

Legislation update: Transfer of business changes and fair entitlements guarantee

Submitted By Firm: Corrs Chambers Westgarth

Contact(s): John Tuck


Anthony Forsyth

Date Published: 11/11/2013

Article Type:

Share This:

Two significant pieces of legislation passed by federal Parliament took effect in late 2012:

  • the Fair Work Amendment (Transfer of Business) Act 2012 (Cth) (Transfer of Business Amendment Act), which has important implications for private sector employers that take over outsourced or privatised functions from State government entities; and
  • the Fair Entitlements Guarantee Act 2012 (Cth) (FEG Act), which replaces the General Employee Entitlements and Redundancy Scheme (GEERS) and enables employees to recover unpaid employment entitlements in the event of their employer’s liquidation or bankruptcy.

Transfer of Business Changes

The Transfer of Business Amendment Act is primarily a response by the federal Labor Government to increased privatisation and outsourcing activity by Coalition State governments, especially in Queensland and NSW. It aims to ensure that public sector employees in all other States have the same protections in the event of a transfer of business as those in Victoria, the ACT, NT and the Commonwealth public service.[1]

The legislation extends the operation of the “transfer of business” rules in Part 2-8 of the Fair Work Act 2009 (Cth) (FW Act) to former State public sector employees who become employed by a national system employer – enabling those employees to retain their previous terms and conditions of employment under State awards or agreements.

With effect from 5 December 2012, under new Part 6-3A of the FW Act (inserted by the Transfer of Business Amendment Act):

  • there must first be a transfer of business from a State public sector employer (old employer) to a national system employer (new employer), i.e:[2]
    • the employment of an employee of the old employer has terminated;
    • within three months of the termination, the former employee becomes employed by the new employer;
    • the employee performs the same or substantially the same work for the new employer; and
    • there is a connection between the old and new employers, i.e. the old employer transfers assets or outsources work to the new employer, or the old and new employers are associated entities (as defined in the Corporations Act 2001 (Cth));
  • where there is a transfer of business within the meaning of the above requirements, the employee’s terms and conditions of employment with the old employer are transferred to their employment with the new employer – this is achieved through the creation of a “copied State instrument” under federal law, reflecting the terms and conditions in the State award or State employment agreement that applied to the employee immediately before the termination of their employment with the old employer;
  • copied State instruments are enforceable under the FW Act in the same way as modern awards and enterprise agreements (e.g. breach of a copied State instrument may give rise to proceedings for recovery of underpayments, civil penalties or injunctions in the Federal Court or Federal Magistrates Court);
  • as is the case with transferable instruments under Part 2-8 of the FW Act, orders may be sought from the Fair Work Commission by a new employer, modifying the effect of a copied State instrument – e.g. by providing that the copied State instrument does not apply to the new employer because its terms and conditions are inconsistent with or inferior to an existing enterprise agreement that covers the new employer;
  • other provisions deal with matters such as the interaction of copied State instruments with the National Employment Standards (NES), modern awards and enterprise agreements; variation and termination of copied State instruments; and the recognition of an employee’s period of service with the old employer for purposes of determining entitlements under the NES and the copied State instrument after their employment by the new employer.

Implications for Employers

  • State public sector unions have sought (unsuccessfully) to challenge measures implemented by the Newman and O’Farrell Governments, in Queensland and New South Wales respectively, to nullify the effect of job security provisions in Queensland awards and agreements[3] and to impose limits on the wage increases that can be ordered by the NSW Industrial Relations Commission.[4]
  • However, the Transfer of Business Amendment Act creates impediments to another key strategy of both State Governments to reduce public sector wage costs – i.e. the contracting out of State functions to the private sector.
  • The legislation is therefore of great significance for:
    • State public sector employers (particularly in Queensland and NSW), which must now consider whether there are any advantages to be gained from outsourcing in circumstances where the new employer may incur the same labour costs for transferring employees under copied State instruments;
    • private sector employers across Australia considering tendering for or obtaining outsourcing contracts from a State public sector employer – private sector employers in this position must now consider, for example, whether to offer employment to any employees of the old employer (given that such employees may bring with them higher labour costs under copied State instruments); and whether, if they do so, the transaction is overall worth-while.

The Fair Entitlements Guarantee

The FEG Act fulfils a 2010 election promise by the ALP to replace GEERS with a Fair Entitlements Guarantee (FEG) scheme enshrined in legislation (rather than simply operating on an administrative basis).

The FEG provides employees with much the same entitlements as those previously available under GEERS. If an employee loses his or her job as a result of the employer entering into bankruptcy or liquidation on or after 5 December 2012, the following arrangements apply:[5]

  • subject to satisfying a number of eligibility requirements (e.g. that the employee’s employment ended within six months of the appointment of a liquidator, administrator or other insolvency practitioner),[6] the employee may recover the following unpaid employment entitlements in accordance with an applicable industrial instrument (e.g. award or agreement) or employment contract:
    • up to 13 weeks’ wages (including allowances, loadings and overtime/penalty rates, but not discretionary payments such as bonuses);
    • accrued but untaken annual leave and long service leave;
    • payment in lieu of notice, up to a maximum of five weeks’ pay;
    • redundancy pay, up to a maximum of four weeks’ pay per year of service (under GEERS, redundancy entitlements were capped at 16 weeks’ pay);
  • all payments are capped at the level of the FEG “maximum weekly wage”, presently $2,364.00 – employees earning above this amount will receive payments under the FEG calculated on the basis of the maximum weekly wage;
  • notice and redundancy entitlements are not payable in circumstances where the business of the employee’s former employer is transferred to another employer, and (within 14 days of the employee’s employment ending) the new employer offers the employee a position involving similar work on terms and conditions that are overall no less favourable to the employee;
  • any improvements in an employee’s employment conditions that occurred within six months of their employment ending may be disregarded in calculating their entitlements, if there is evidence that this was done artificially in the knowledge that an insolvency event was likely to occur;
  • eligible employees may make a FEG claim online, and if the claim is successful, an advance will be made by the Department of Education, Workplace and Employment Relations (DEEWR) to the claimant or to an insolvency practitioner who will then provide the advanced amount to the claimant;
  • employees have a right to an internal DEEWR review of decisions on FEG claims, and a new additional right of review before the Administrative Appeals Tribunal;
  • the Commonwealth is entitled to seek to recover any amounts advanced under the FEG, in the liquidation or bankruptcy process.

Implications for Employers

  • The legislated FEG provides employees with greater certainty and reassurance that unpaid employment entitlements will be recoverable in the event of their employer’s bankruptcy or liquidation.
  • The new arrangements do not differ greatly from those applicable under GEERS. However, given the increase in the redundancy entitlements that are payable under the FEG, employers may need to be prepared for union claims for enhanced severance payments in enterprise agreement negotiations.

[1] The Hon. Bill Shorten MP, Minister for Employment and Workplace Relations, Second Reading Speech: Fair Work Amendment (Transfer of Business) Bill 2012, 11 October 2012.

[2] The provisions setting out when there is a transfer of business from an old to a new employer are “intended to reflect, as far as possible, the provisions in Division 2 of Part 2-8 of the FW Act”: Explanatory Memorandum to the Fair Work Amendment (Transfer of Business) Bill 2012, para [9].

[3] Public Sector and Other Legislation Amendment Act 2012 (Qld), upheld in AWU, Queensland v State of Queensland; State of Queensland v Together Queensland, Industrial Union of Employees and Another [2012] QCA 353 (14 December 2012).

[4] Industrial Relations Amendment (Public Sector Conditions of Employment) Act 2011 (NSW) and Industrial Relations (Public Sector Conditions of Employment) Regulation 2011 (NSW), upheld in The Public Service Association and Professional Officers’ Association Amalgamated of NSW v Director of Public Employment [2012] HCA 58 (12 December 2012).

[5] Where the employer entered into bankruptcy or liquidation prior to 5 December 2012, GEERS continues to apply; for employee eligibility requirements and other details of GEERS, see here.

[6] For further information about these eligibility requirements, see here.

Find an Employment Lawyer

View or print a complete ELA member list »

Client Successes

Altra Industrial Motion Inc.

Altra Industrial Motion Inc. has multiple locations in the U.S., as well as Central America, Europe, and Asia. The Employment Law Alliance has proved to be a great asset in assisting us in dealing with employment issues and matters in such diverse venues as Mexico, Australia, and Spain. We have obtained excellent results using the ELA network for matters ranging from a multi-state review of employment policies to assisting with individual employment issues in a variety of foreign jurisdictions.

In one instance, we were faced with an employment dispute with a former associate in Mexico that had the potential for substantial economic exposure. The matter had been pending for over a year, and we were not confident in the employment advice we had been receiving. I obtained a referral to the ELA counsel in Mexico, who was able to obtain a favorable resolution of the dispute in only a few days. Based on our experiences with the ELA, we would not hesitate to use its many resources for future employment law needs.

American University in Bulgaria

In my career I have been a practicing attorney, counsel to the Governor of Maine, and CEO of a major public utility. I have worked with many lawyers in many settings. When the American University in Bulgaria needed help with employment litigation in federal court in Syracuse, New York, we turned to Pierce Atwood, the ELA member we knew and trusted in Maine, for a referral. We were extremely pleased with the responsiveness and high quality of service we received from Bond Schoeneck & King, the ELA's firm in upstate New York. I would not hesitate to recommend the ELA to any employer.

David T. Flanagan
Member of Board of Trustees 

Arcata Associates

I really enjoyed the Conducting an Effective Internal Investigation in the United States webinar.  We are in the midst of a rather delicate employee relations issue in California right now and the discussion helped me tremendously.  It also reinforced things that you tend to forget if you don't do these investigations frequently.  So, many, many thanks to the Employment Law Alliance for putting that webinar together.  It was extremely beneficial.

Lynn Clayton
Vice President, Human Resources

Barrett Business Services, Inc.

I recently participated in the ELA-sponsored webinar on the Employee Free Choice Act.  I was most impressed with that presentation.  It was extremely helpful and very worthwhile.  I have also been utilizing the ELA's online Global Employer Handbook.  This compliance tool is absolutely terrific. 

I am familiar with several other products that purport to provide up-to- date employment law information and I believe that this resource is superior to other similar compliance manuals.  I am delighted that the ELA provides this free to its members' clients.

Boyd Coffee Company

Employment Law Alliance (ELA) has provided Boyd Coffee Company with a highly valued connection to resources, important information and learning. With complex operations and employees working in approximately 20 states, we are continually striving to keep abreast of specific state laws, many of which vary from state to state. We have participated in the ELA web seminars and have found the content very useful. We appreciate the ease, cost effectiveness and quality of the content and presenters offered by these web seminars.  The Global Employer Handbook has provided our company with a very helpful overview of legal issues in the various states in which we operate, and the network of attorneys has helped us manage issues that have arisen in states other than where our Roastery and corporate headquarters are located in Portland, Oregon.

Capgemini Outsourcing Services GmbH

As an international operating outsourcing and consulting supplier Capgemini has used firms of the Employment Law Alliance in Central Europe. We were always highly satisfied with the quality of employment law advice and the responsiveness. I can really recommend the ELA lawyers.

Hirschfeld Kraemer

Stephen HirschfeldAs an employment lawyer based in San Francisco, I work closely with high tech clients with operations around the globe. Last year, one of my clients needed to implement a workforce reduction in a dozen countries simultaneously. And they gave me 48 hours to accomplish this. I don't know how I could have pulled this off without the resources of the ELA. I don't know of any single law firm that could have made this happen. My client received all of the help they needed in a timely fashion and on a cost effective basis.

Stephen J. Hirschfeld

Hollywood Entertainment Corporation

As the Vice President for Litigation & Associate General Counsel for my company, I need to ensure that we have a team of top-notch employment lawyers in place in every jurisdiction where we do business. And I want to be confident that those lawyers know our business so they don't have to reinvent the wheel when a new legal matter arises. With more than 3400 stores and 35,000 employees operating in all 50 U.S. states and across Canada, we rely on the ELA to partner with us to help accomplish our objectives. I have been delighted with the consistent high quality of the work performed by ELA lawyers. I encourage other in-house counsel to use their services, as well.

Ingram Micro

Ingram Micro is the world's largest technology distributor, providing sales, marketing, and logistics services for the IT industry around the globe. With over 13,000 employees working throughout the U.S. and in 35 international countries, we need employment lawyers who we can count on to ensure global legal compliance. Our experience with many multi-state and multi-national law firms is that their employment law services are not always a high priority for them, and many do not have experts in many of their offices. The ELA has assembled an excellent team of highly skilled employment lawyers, wherever and whenever I need them, and they have proven to be an invaluable resource to our company.

Konami Gaming

Our company, Konami Gaming, Inc., is growing rapidly in a very diverse and highly regulated industry. We are aggressively entering new markets outside the domestic U.S., including Canada and South America. I have had the recent opportunity to utilize the services provided by the ELA. The legal advice was both responsive and professional. Most of all, the entire process was seamless since our Nevada attorney coordinated the services and legal advice requested. I look forward to working with the ELA in the future, as it serves as a great resource to the legal community.

Jennifer Martinez
Vice President, Human Resources

Nikkiso Cryo, Inc.

Until recently, I was unaware of the ELA's existence. We have subsidiaries and affiliates throughout the United States, as well as in Asia, the Middle East and Europe. When a recent legal issue arose in Texas, our long-time Nevada counsel, who is a member of the ELA, suggested that this matter be handled by his ELA colleague in Dallas. We are very pleased with the quality and timeliness of services provided by that firm, and we are excited to now have the ELA as an important asset to help us address employment law issues worldwide.

Palm, Inc.

The ELA network has been immensely important to our company in helping us address an array of human resources challenges around the world. I strongly encourage H.R. executives who have employees located in many different jurisdictions to utilize the ELA's unparalleled expertise and geographic coverage.

Stacy Murphy
Former Senior Director of Human Resources

Rich Products

As the General Counsel for a company with 6,500 employees operating across the U.S. and in eight countries, it is critical that I have top quality lawyers on the ground where we do business. The ELA is an indispensable resource. It has taken the guesswork out of finding the best employment counsel wherever we have a problem.

Jill K. Bond
Senior Vice President/General Counsel, Shared Services and Benefits

Ricoh Americas Corporation

We have direct sales and service offices all over the U.S., but have not necessarily had the need in the past for assistance with legal work in every state where we have a business presence. From time to time, we suddenly find ourselves facing a legal issue in a state where we have no outside counsel relationship. It has been a real benefit to know that the ELA has assembled such an impressive team of experts throughout the U.S. and overseas.

A few years ago, we faced a very tough discrimination lawsuit in Mississippi. We had never had to retain a lawyer there before. I was absolutely delighted with the Mississippi ELA firm. We received an excellent result. They will no doubt handle all of our employment law matters in Mississippi in the future. I have also obtained the assistance of several other ELA firms around the U.S. and have received the same outstanding service. The ELA is a tremendous resource for our company.

Roberts-Gordon LLC

Our affiliated companies have used the Employment Law Alliance in connection with numerous acquisitions, and have always been extremely pleased with our ability to obtain the highest quality legal advice on due diligence issues from jurisdiction to jurisdiction. We have found the Employment Law Alliance firms to be not only first rate with respect to their legal advice but also responsive and timely in assisting us with federal and state law issues critical to our due diligence efforts. We consider the Employment Law Alliance to be an important part of our team.

Rockwell Collins, Inc.

We have partnered with many ELA firms on the development and execution of case management strategies with very positive results. We have been very pleased with the legal advice and counsel provided by the law firms we have utilized who are affiliated with the Employment Law Alliance. The ELA firms we have worked with are customer focused, responsive, and thorough in their approach to handling labor and employment law matters.

Elizabeth Daly
Assistant General Counsel


Sanmina-SCI has facilities strategically located in key regions throughout the world. Our customers expect that we will provide them with the highest quality and most sophisticated services in the marketplace. We have that same expectation for the lawyers with whom we do business. With operations in 17 countries, we need to be certain that we have a team of lawyers working together to address our employment law needs worldwide. The ELA has delivered exactly what it promised-- seamless and consistent high quality services delivered in each locale around the globe. It has quickly become a key asset for our human resources department.


We own, manage, and franchise hotels throughout the U.S. and in more than 90 countries. With more than 145,000 employees worldwide, ensuring that we comply with the complex web of local labor and employment laws in every one of these jurisdictions is a daunting task. The Employment Law Alliance has served as an important resource for us and we have benefited greatly from its expertise and long reach. When a legal dispute or issue has arisen in some far-flung place, Employment Law Alliance lawyers have always provided responsive, practical, and cost-effective assistance.

Wilmington Trust Corporation

Wilmington Trust has used the ELA to locate firms in California, Washington State, Georgia, and Europe. Our experience with the ELA lawyers with whom we have worked has always been one of complete satisfaction and prompt, practical advice.

Michael A. DiGregorio
General Counsel