Transfer of business – transfer of entitlement

Fair Work Ombudsman v WKO Pty Ltd [2012] FCA 1129 (17 October 2012)

When a child care worker claimed unpaid parental leave, her employer told her she wasn’t eligible, because she hadn’t worked for the centre for the requisite 12 months qualifying period. But her service with the centre of the previous owner was ‘continuous’ because of the transmission laws, and the employer was found liable by the federal court.

To make matters worse, after the employee had applied for the leave, the employer unilaterally reduced her hours and then told her she had to resign rather than get unpaid parental leave.

The Fair Work Ombudsman launched the prosecution and was able to prove that the employer had been told by the Ombudsman office when making an enquiry, that the employee may have been eligible because of transmission. But the employer did not seek any further advice and the Court took a fairly dim view of that failure.

The employer was fined $13,200 (twice, both as an entity and the actual Director as an individual) and again, both entities to pay $5,000 each to the employee as compensation. The cost of getting some advice about the situation would have been a lot less than these fines and damages.

Transmission of business is not a particularly complex area when it comes to employment. Employers should never assume that the clock starts again when there is a takeover. Even if accrued paid leave entitlements are paid out, some entitlements using length of service are unaffected by a payout. This usually means the service is effectively continuous for those entitlements.