Service with one employer will count as service with a second employer in different circumstances depending on the relationship between the two employers.
In this regard, it is important to determine if the employers are associated entities or not.
Service with one employer (first or old employer) will count as service with another employer (second or new employer) if two conditions are met:
An associated entity is defined in s.50AAA of the Corporations Act 2001.[2]
An entity (the associate) may be an associated entity of another entity (the principal) in the following circumstances:
The word control is defined in s.50AA of the Corporations Act. One entity controls another when the first entity can make decisions that determine the financial and operating policies of the second entity.
Service with one employer (first or old employer) will count as service with another employer (second or new employer) that is NOT an associated entity of the first employer, if the employee is a transferring employee in relation to a transfer of business from the first employer to the second employer.[4] The following flow chart will assist in determining whether the employee is a transferring employee.
Was the employee's employment with the old employer terminated?
Fair Work Act 2009 s.311(1)(a)
No transfer of business
Was the employee employed with the new employer within 3 months of their employment being terminated?
Fair Work Act s.311(1)(b)
No transfer of business
Was the work that the employee performed for the new employer substantially the same as the work performed for the old employer?
Fair Work Act s.311(1)(c)
No transfer of business
Go to the next flowchart:
Connection between the old and new employers.
Was there a transfer of assets from the old employer to the new employer?
Fair Word Act s.311(3).
Transfer of assets occur when there is an arrangement between the old employer and the new employer where the new employer owns or has beneficial use of some or all of the assets of the old employer. These assets need to relate to or be used in connection with the transferring work.
Did the old employer outsource the work of the employee to the new employer?
Fair Work Act s.311(4).
Example – old employer outsourcing work to a new employer
Employee works as a cleaner at company A. Company A decides that they will outsource cleaning to company B. Employee is then employed by Company B to carry out substantially the same cleaning duties as it did before at Company A.
Did the new employer cease outsourcing the work of the employee to the old employer?
Fair Work Act s.311(5).
Example – new employer ceases outsourcing
Employee works at company A manufacturing goods for company B. Company B decides that it will now manufacture the goods in-house and no longer requires the services of Company A. Company B hires the employee to carry out substantially the same manufacturing duties as it did before at Company A.
No transfer of business
Did the new employer inform the employee in writing, before the employee started work, that a period of service with the old employer would not be recognised?
Fair Work Act s.384(2)(b).
There is a transfer of employment and service with the old employer will count as service with the new employer.
Any period between ceasing employment with the old employer and starting with the new employer will not break service. However, this period will not count towards service.