Refusal to sign employment contract

[RebeccaS]

Hi
Our company has recently been bought out. All employees have kept their jobs and been given new contracts that meet the same conditions as their previous one with the old employer, except they now receive more AL entitlements than before.
I have 2 employees who are refusing to sign their contracts as they want to negotiate for more money. They have been told that this will not be happening and yet they still refuse to sign. We have reached a stale mate - what can we do to move forward?
Thanks!

[Job Media]

When you say you company has been "bought out" does this mean another company has acquired or purchased your company?

This is known as "Transmission of Business" in the FWA, which of course only deals with the obligations of the new employer, but not the transferring employees!

From what I have read the FWA makes no provision for renegotiation of remuneration and simply assumes the new employer will honour all previous employment conditions and accrued leave and any other entitlements, so that the employees are not disadvantaged by the move to a new employer. However, I don't think the FWA mentions new employment contracts, but just assumes that the responsibility for the employees is transferred.

Unfortunately you may need to consult a specialist lawyer unless someone one else on here knows for sure how to deal with this situation.

Just as a matter of interest, has the company name changed?
And have their old employment contracts actually been terminated?

[RebeccaS]

Yes - we were purchased by another company and therefore the company name has changed.

The old contracts were not terminated. New contracts were issued due to the increase in the AL accruals. Other than that, we are honouring all previous conditions. The employees have not been disadvantaged at all - if anything, they are better off simply because they now receive more AL every year.

[Job Media]

You could try suggesting that they can continue on their old employment contracts if they wish.

[Chipmunk]

Originally Posted by Job Media

When you say you company has been "bought out" does this mean another company has acquired or purchased your company?

This is known as "Transmission of Business" in the FWA, which of course only deals with the obligations of the new employer, but not the transferring employees!

From what I have read the FWA makes no provision for renegotiation of remuneration and simply assumes the new employer will honour all previous employment conditions and accrued leave and any other entitlements, so that the employees are not disadvantaged by the move to a new employer. However, I don't think the FWA mentions new employment contracts, but just assumes that the responsibility for the employees is transferred.

Unfortunately you may need to consult a specialist lawyer unless someone one else on here knows for sure how to deal with this situation.

Just as a matter of interest, has the company name changed?
And have their old employment contracts actually been terminated?

Unfortunately it’s a little more complicated than this. (Please note this is a complex area of workplace/common law and the usual caveats apply).

Normally a conversation will take place between the current owner and the new owner, and normally it will include what employees will be transferred across to the new owner and who will take responsibility of the employee entitlements.

If the current owner wants the entitlements to transfer across, this will be seen as a financial liability and negotiated in the contract of sale. You can get the situation where one of the following two things can happen: Either the employee’s will transfer across with all there entitlements, or the current owner will pay out these entitlements and the employees will transfer across starting fresh with the new owner.

The FWA is a safety net, and does not deal with employment contracts negotiated at common law. That’s where you need to seek some specialised workplace relations advice on your current situation.

[HeidiC]

It would be my opinion that if they are refusing to sign the contracts with the new employer - they are refusing the new employer's offer of employment and are therefore will not employed by the new employer. As it is a transmission of business, the old contract would no longer be valid as it was with a completely different party. Transmission of Business in the FWA is just a 'promise' that the new employer will take on the responsibility of all employee's entitlements from the old employer - it is not a promise to increase salary or working conditions.

I am guessing that the new employer agreed to pay a certain purchase price based on the previous employers payroll liability and that is why they do not wish to offer a higher salary to these new employees? Are the employees who are holding out indispensible?

I would offer these two employees an opportunity for voluntary redundancy if they do not wish to work with the new employers. If they do wish to work with the new employer, I suggest counselling them to sign the contract and review the pay in 6 to 12 months, once the new employers have settled into the new business and have a better control on the finances of the company.

But please be aware that this is just my opinion and I would suggest running it by your IR/Company Lawyer.