Section 365 of the Fair Work Act 2009 (Cth) deals with the transfer of business provisions. This section provides that, in the event of a transfer of business from one employer to another, the employees of the old employer become employees of the new employer on their existing terms and conditions of employment.
The section applies where there is a transfer of business in circumstances where the business, or part of the business, is transferred from one employer to another. The transfer can occur by sale, gift, exchange or other means. The section also applies where there is a transfer of assets from one employer to another, where those assets are used in the business, or part of the business, being transferred.
Importantly, section 365 provides that the transfer of employees does not break their continuity of service, and they are entitled to the same period of continuous service with the new employer as they had with the old employer.
The new employer is also required to recognise any service-related entitlements that the employees had with the old employer, such as long service leave, sick leave and annual leave. The new employer is also bound by any applicable enterprise agreements, awards, or workplace determinations that were in place with the old employer.
There are some exceptions to the operation of section 365, such as where the transfer of business is from an associated entity of the old employer, or where the transfer is of a business that is a State or Territory public sector business.
Overall, section 365 provides important protections for employees in circumstances where their employer's business is transferred to a new employer, ensuring that their terms and conditions of employment are preserved, and their continuity of service is maintained.
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