Industrial relations law

Fair Work Act

The Fair Work Act 2009 (Cth) (FWA) became law on 1 January 2010. It phased out Australian Workplace Agreements and old awards, and has introduced a series of "modern awards". It also applies the National Employment Standards to all employees. These provide ten minimum standards of conditions for employees.

Industrial instruments binding a purchaser

When buying a business, the purchaser may become bound by a variety of awards, agreements and determinations including:

Employer-specific instruments

Section 313 of the FWA provides that the purchaser of a business is bound by “transferrable instruments”, defined in s 312 of the Act to be either an enterprise agreement that has been approved by the Fair Work Commission, a workplace determination or a named employer award. Similarly, s 768AM of the FWA provides that the purchaser of a State employer will be bound by a “copied State award” or a “copied State agreement”, defined in s 768AF of the FWA. These are agreements, determinations and awards, specific to the vendor.

Industry-wide awards and determinations

Awards apply according to the type of industry the business is in, and according to the type of work the employees perform. For example, if you buy a business which fits fire sprinklers, the Plumbing and Fire Sprinklers Award 2010, will automatically apply to each of your workers carrying out work as referred to in that award.

Individual arrangements

Individual arrangements under the FWA include:

• • individual flexibility arrangements; and
• • guarantees of annual earnings.

What instruments apply to a particular business?

To find what instruments apply to a business you can conduct a search, but this may not give the true picture:

• • it does not include all of the employer specific instruments; and
• • it may be difficult to determine which awards apply to each of the vendor’s employees.

The purchaser’s solicitor should include provisions in the contract for sale of business to force the vendor to disclose any applicable award, determination or agreement. There should then be the subject of a careful examination during the due diligence process.

Employment records

Under s 535 of the FWA, and under the Pt 3-6 Div 3 of Fair Work Regulations 2009 (Cth), detailed employment records must be kept. The regulations provide that, on a sale of business, these records must be handed to the purchaser and the purchaser must keep them as if they were their own records.

See Industrial relations law.