Guide to Restructuring a Cross-Border Workforce

Yes. While there is no one single definition for all purposes, the core concept is that redundancy occurs where an employer dismisses an employee because the employer no longer requires the employee’s job to be performed by anyone.

Besides obvious examples such as a business close-down or outsourcing, redundancy also occur through both:

(a) downsizing, where a given position may still exist but an employer requires fewer employees to perform it; and

(b) restructuring, which redistributes the work of a single job between other positions, eliminating that particular role.

Yes, there is. An employee is redundant if the following conditions are met:

• the employer adopted a decision on organisational change;
• the change concerns the scope of activities, tasks, technical equipment, number of employees, or otherwise alters the structure of the employer;
• the aim of the change is to increase work efficiency, reduce costs, or otherwise alter the performance of the employer’s enterprise; and
• as a result, the employee’s work is redundant or not needed.

According to case law, the employee’s work is not needed, either at all or at least in part, with the rest being distributed among the current employees or corporate body. Rebranding the position, hiring a new employee to carry out the work of the dismissed employee shortly thereafter, or otherwise fabricating the redundancy with an ulterior motive does not qualify as redundancy.

Czech law provides two other similar reasons based on which an employer is entitled to terminate employment – closing down or relocation of the employer’s undertaking or its part. Together with redundancy, these three reasons are known as “organisational reasons” (in Czech: “organizační důvody”) for termination of employment. However, closing down and relocation of the employer or its part are different reasons than the redundancy itself, and therefore we do not address them further.

Procedures vary depending on whether there are particular obligations and employee entitlements in the relevant scenario. However, the process applicable to most roles is as follows:

(a) notify affected employees of the proposed redundancies. It is best practice to do this in writing.

(b) undertake a consultation process, if required or advisable (see question 4 and 6).

(c) consider whether the employee can be redeployed within the employer’s enterprise or the enterprise of an associated entity (see question 15).

(d) notify employees of the outcome: either their employment is being terminated by reason of redundancy, or they are being offered an alternative role by way of redeployment.

(e) make any required redundancy payments in the employee’s final pay.

Some of these steps (notably (b) and (c)) may not be required for professional or managerial employees paid above a “high income threshold” which is currently $167,500 (FTE) and is indexed each 1 July.

The employer must take the following steps:

• review underlying documents (including organisational charts), decide what organisational change needs to be made and work out which positions are no longer needed, and plan the timing;
• adopt a decision on organisational change, including its effective date and which redundant positions are cancelled. The decision doesn’t have to be in writing or state reasons for the redundancy. However, both are highly recommended and a market standard, as this serves as evidence;
• if there are unions, consult the unions in advance (see question 4), and if a union representative is supposed to be made redundant, obtain the union’s consent in advance (see question 11);
• execute dismissal either by a termination agreement (recommended) or a termination notice with the redundant employees. In case of termination notice, the redundancy must (based on the decision) take effect on or before the notice period expired, not after; and
• implement the organisational change (including updating organisational charts).

Organisational changes may also be governed by collective agreements, in which case additional rules may apply (this applies to all the questions below).

In the case of a “collective redundancy”, it is more likely that a consultation process will be required, as referred to in question 2(b) (for more detail, see questions 4 and 6).

Further, if an employer is dismissing 15 or more employees by reason of redundancy, there also are additional steps in the process:

(a) the employer must give notice to the relevant government unemployment agency (Services Australia, better known as Centrelink) about the proposed dismissals in the prescribed form. The form must be submitted as soon as practicable after the decision is made and before dismissing any employees.

(b) where the employer could reasonably have been expected to know that one or more of the redundant employees are members of any union(s):

1. notification: As soon as possible after making the decision and before implementing dismissals, the employer must notify the relevant union of: the proposed dismissals and the reasons for them; the number and categories of employees likely to be affected; and when it is intended that dismissals will occur.
2. consultation: see question 6.

Yes, Czech law provides a special procedure for “collective dismissal” in all three cases of organisational changes (see question 1).

The threshold is:

• ten employees if the employer has 20 to 100 employees;
• 10% of employees if the employer has 101 to 300 employees; and
• 30 employees if the employer has more than 300 employees.

The respective number of employees must be dismissed due to redundancy within a period of 30 days. If at least five employees are dismissed within 30 days by termination notice due to redundancy, then employees dismissed in the same period by termination agreement are included in these thresholds.

In addition to the process above, collective dismissal must be:

• consulted with unions 30 days in advance, or notified to each affected employee if there are no active unions at the employer; and
• notified to the local Labour Office: (i) in advance, including information on commencement of the consultation process with unions; and (ii) on its result once it’s completed, in the form of a written report that must be delivered in copy to unions, which then have the right to comment on it – employment relationships can terminate only after the lapse of 30 days following this.

Strictly speaking, most consultation obligations are owed to individuals, not unions. Employees may however choose to be represented by a union or other representative during the consultation process, so the practical answer is often “yes”.

Consultation obligations may be owed to relevant unions directly if 15 or more employees will be retrenched (see questions 3 and 6).

There is no requirement for agreement to be reached as part of the consultation process.

Yes, the employer must consult any termination notice in advance. Agreement doesn’t have to be reached (with the exception of employees with enhanced protection; see question 11). In practice, the consultation is more of an announcement.

In case of collective dismissal, consultation must take place, and the employer must try to reach an agreement and inform the Labour Office of the result.

There is no requirement for agreement to be reached.

It is the employer’s right to make an organisational change and its factual validity cannot be challenged. However, the individual dismissals may be challenged by employees. If successful (ie, the employer doesn’t prove redundancy), the restructure in the individual case may be prevented.

In the case of collective dismissals, it may be delayed by the unions prolonging the consultation. However, even then the unions and the Labour Office can’t prevent the dismissal, and the only way to prevent individual dismissal is a successful individual challenge by the dismissed employee.

If the unions believe that the collective agreement was violated by the redundancy or in the process of its implementation, they may dispute this violation. The dispute may be resolved by a mediator or escalated to an arbitrator. However, this doesn’t prevent the employer from executing the dismissals or restructure (only if violation is later found, it may have certain implications based on the individual collective agreement and nature of its violation).

Other than as set out in question 3 above, consultation obligations arise under the specific instruments that regulate employees’ minimum terms and conditions of employment, namely:

(a) modern awards, which are industry, occupational or (occasionally) enterprise-specific sets of minimum terms and conditions, set by the national labour tribunal, the Fair Work Commission.

(b) enterprise agreements, which are collectively negotiated at an enterprise - or, more recently, multi-enterprise - level.

(c) Possibly, though hardly ever arising in practice, individuals’ employment contracts.

Employers should refer to the specific terms of any applicable modern award(s) and enterprise agreement(s) before undertaking consultation. Under standard award terms, which are frequently mirrored in enterprise agreements, a ‘usual’ consultation process involves the employer:

(a) giving notice to affected employees and their representatives (if any) of the change it has decided to implement which will result in redundancies;

(b) giving affected employees and their representatives all relevant information about the proposed redundancies in writing, including the nature of the redundancies, their expected effect on employees and any other matters likely to affect employees (but not any confidential information the disclosure of which would be contrary to the employer’s interests);

(c) discussing with affected employees and their representatives the proposed redundancies, the likely effect on employees and any measures to avoid or reduce the adverse effects of the redundancies on employees; and

(d) promptly considering any matters raised by the employees or their representatives about the proposed redundancies, before making a final decision.

Some enterprise agreements may prescribe additional requirements. For example, under modern awards, consultation must generally commence as soon as practicable after a definite decision regarding the restructure is made, whereas some agreements require consultation at the point a decision is being considered.

The consultation process does not necessarily require any specific number of meetings, unless prescribed in an enterprise agreement. The length of the consultation process will depend on the matters raised by employees or unions during consultation, the circumstances and complexity of the restructure, and the possibility of redeployment.

If an employer fails to comply with its consultation obligations, it may be exposed to:

(a) an unfair dismissal claim, in which it will not have access to a full defence of “genuine redundancy”, and which could result in an award of compensation or reinstatement; and

(b) a claim for breach of the modern award, enterprise agreement or statute creating the obligations, giving rise to remedies including:

1. injunctions restraining the implementation of redundancies pending the conduct and completion of consultation in accordance with the relevant instrument;
2. compensation to affected employees; and/or
3. penalties.

There is no strict requirement to consult if an employee is not covered by an award or enterprise agreement, and less than 15 employees are affected. It is, r, best practice to consult, following a process similar to that outlined above but tailored to the particular circumstances.

In case of individual dismissal, the consultation process is, rather, a notification (with the exception of employees with enhanced protection; see question 11) including:

• the identity of the employee;
• termination grounds (redundancy); and
• basic details of the redundancy (why and when).

It should take place prior to the dismissal (no specific deadline is given).

In case of collective dismissal, the consultation process includes:

• measures preventing or limiting the collective dismissal;
• mitigation measures (eg, employing the redundant employee at other workplaces of the employer);
• reasons;
• number and professions of redundant employees;
• number and professions of all the employees;
• the period during which the collective dismissal takes place;
• selection method of redundant employees; and
• severance pay and other rights of the redundant employees.

The consultation process must take place no later than 30 days prior to the collective dismissal. The local Labour Office must be notified as well (see question 3).

The administrative fine for violation of the consultation process with unions is up to 200,000 koruna. Employees who suffer damage as a result may claim compensation.

No. The reasons for proposed redundancies will be provided to employees as part of any consultation (see question 2), but a redundancy need not be based on particular economic grounds. Insofar as there are such grounds, they need not be proved to the satisfaction of employee representatives.

Yes, an economic business rationale should be the reason for organisational change, and therefore the redundancy, and as such should be part of the consultation.

No. However, this would be best practice, and in any event, redeployment will tend to be considered on an individual level.

In case of collective dismissals, if there are no unions or employee representatives, the employer must inform and directly consult the affected employees to the same extent.

In case of individual dismissal, it is not a requirement, nor best practice, and highly depends on the strategy in the individual case.

No. Employers have a broad measure of flexibility as long as the selection criteria or reasons for choosing between employees are not unlawful (e.g. not unlawfully discriminatory).

The only rule is that the employee’s position or work must be genuinely redundant (see question 1). If more than one employee fulfils this condition, it is up to the employer which employee to select. However, this choice must not indicate that there are in fact different motives for the redundancy of the selected employee (eg, disputes with the employer, unsatisfactory performance, or gender or other discriminatory motives).

No, although the retrenchment of some employees may more readily give rise to an inference that the redundancy was not genuine and the retrenchment was in fact for some other reason (see question 11).

Yes, a termination notice due to redundancy is not allowed during the period for which an employee is:

• declared temporarily medically unfit for work or in institutional treatment (unless the employee has intentionally caused this unfitness, or it is a direct consequence of the employee’s alcohol intoxication or substance abuse);
• deployed in military exercises or military service;
• on long-term full leave to act in public office;
• pregnant, or on maternity leave, paternity leave, or parental leave;
• declared temporarily unfit for night work if they perform night work; or
• on leave caring for a child under 10 years of age, treating a child under 10 years of age or other natural persons, or providing long-term care, all as specified in the Czech Sickness Insurance Act.

No, any employee can be retrenched if their job is genuinely redundant. An employer must not however retrench employees for unlawful or discriminatory reasons, or implement a sham redundancy to target employees on this basis. This creates a de facto higher level of risk for employees with protected characteristics, such as those:

• exercising statutory rights, e.g. to take parental leave;
• who are union members or representatives; or
• who have made complaints or enquiries in relation to their work.

Yes, members of a trade union body during their term of office and for a period of one year after the end of their term of office. The employer must have prior consent of the unions for termination of their employment relationship by a notice. Consent is deemed to be given if the unions don’t respond within 15 days. Consent is valid for two months. Termination notice without such consent is invalid unless the court decides in the validity case that the employer could not have been justifiably required to keep the employee.

There is a minimum statutory scale of redundancy payments that applies to most employees in Australia, based on their length of service with the employer.

Employees may also be eligible to receive redundancy payments under:

(a) an “industry specific redundancy scheme” in a modern award, which will displace the default statutory entitlement; or

(b) an enterprise agreement, which must be at least as beneficial as the statutory entitlement and are commonly more beneficial; or

(c) an employment contract that supplants the statutory entitlement.

Some employees do not get redundancy pay when their job is made redundant, including casual employees; trainees on a training agreement; apprentices; employees of a small business with fewer than 15 employees; and dismissals where the redundancy is part of the “ordinary and customary turnover of labour”.

The timing of redundancy payments is determined by the relevant employment contract, enterprise agreement or modern award, subject to a general statutory rule that means employees must be paid at least monthly. Modern awards generally require payment within a week.

There is no general requirement to pay into a redundancy fund or trust. These arrangements do exist in some industries, such as construction.

A redundant employee is entitled to a statutory severance payment, regardless of whether the employment termination is made by notice or agreement and if the redundancy is explicitly stated as the reason for the termination.

The severance payment is due on the next scheduled pay date following the termination of employment. A later due date can be agreed.

Under statute, the amount of redundancy pay an employee is entitled to receive is based on ‘continuous service’ with their employer. The redundancy amount is paid at the employee's base salary/wage rate, not including other amounts such as incentive-based payment and bonuses, loadings, allowances, or overtime rates.

The table below sets out what payment most employees are entitled to under statute when retrenched when they are made redundant (as defined by the NES). Certain awards, enterprise agreements, or an employment contract may provide for more (see question 12).

The initially counterintuitive reduction of the entitlement when an employee attains 10 years of service is due to employees becoming entitled to additional long service leave entitlements at this point.

When an employer terminates an employee’s employment on by way of redundancy, the employer must also pay the employee all other amounts ordinarily owed upon termination.

Yes, if more than 15 employees are to be retrenched (see question 3), but otherwise no.

The severance payment amount differs based on the length of the employment as follows:

• one gross average monthly salary of the employee if the employment lasted less than one year;
• two gross average monthly salaries of the employee if the employment lasted at least one year but less than two years; and
• three gross average monthly salaries of the employee if the employment lasted at least two years.

If the working hours account applies (specific working hours distribution scheme under the Czech Labour Code) the statutory severance is the relevant amount above plus three gross average monthly salaries of the employee.

The severance payment may also be higher if stated so by:

• agreement between the parties;
• the employer’s internal regulations; or
• a collective bargaining agreement.

A gross average monthly salary of the employee must be calculated for each employee separately using the specific rules of the Labour Code.

An employee can make either:

(a) An unfair dismissal claim, in the Fair Work Commission. To make such a claim the employee must have six months’ service with the employer (12 months for a small business). Employees earning more than the high-income threshold are also excluded unless they are covered by a modern award or enterprise agreement.

(b) A claim that the dismissal was unlawful. These claims generally involve two steps: conciliation and/or investigation by a first body; followed by referral to a court or tribunal if the matter is not resolved at the first stage. The forum may vary:

1. Many claims under the federal “Fair Work” legislation are initially made in the Fair Work Commission. Following unsuccessful conciliation they are filed in the Federal Court of Australia, Division 2 of the Federal Circuit and Family Court of Australia, or (much less commonly) a State court exercising federal jurisdiction.
2. If the dismissal is alleged to have been prohibited by Commonwealth legislation dealing with age, sex, racial or disability discrimination, the complaint is initially made to the Australian Human Rights Commission, following which, absent resolution, it is heard by a federal court.
3. If the dismissal is alleged to have been prohibited by State or Territory anti-discrimination legislation, a complaint is initially made to a relevant anti-discrimination body. If the matter is not reserved it is decided by a State or Territory court or tribunal.

In many “Fair Work” claims a union can bring a claim in its name on behalf of a member employee, or a person who is eligible to be a member. In other cases the employee must bring the claim themselves, but their union can represent them.

Not in cases of individual dismissals.

In cases of collective dismissals, the employer must notify the relevant branch of the Labour Office:

• of the intention to carry out collective dismissal;
• that the consultation process has been initiated with the unions or the employees; and
• of the specific aspects of the collective dismissal, to the same extent as the unions (see question 6).

Following the consultation, the employer must deliver a written report to the Labour Office stating:

• that the employer has decided on collective redundancies;
• the outcome of the consultation process;
• the number and occupational composition of all employees; and
• the number and occupational composition of the employees to be made redundant.

A copy of the report must be delivered to the unions, which then have the right to comment on it.

There is no general rule or duty to this effect. In practice the answer is usually yes, however, because:

(a) consultation with employees and their representatives generally requires discussion of alternative to mitigate the effects of proposed change on employees. This is only an obligation to consider such alternatives, not to adopt them.

(b) enterprise agreements may contain particular clauses imposing obligations of this kind, such as considering reductions in hours, job swaps, or calling for volunteers to be retrenched.

(c) the absolute defence of “genuine redundancy” is not available in an unfair dismissal claim if it would have been reasonable to redeploy the employee within the employer’s enterprise, or that of a related entity.

(d) if there is a suitable alternative role available within the employer’s enterprise, appointing the employee will avoid the expense of a redundancy payment. If such a role is available within another company and is procured for the employee, regardless of whether it is accepted, it may either disentitle the employee to these payments or give rise to a right to apply to the Fair Work Commission to seek a reduction of the payment.

No, generally there is no such obligation. If the conditions for dismissal due to redundancy are met, the employer is not obliged to offer the employee an alternative solution.

However, in some specific individual cases, the courts have concluded that if the employer still needs the work on part-time basis, the employer should first offer the employee this part-time job.

Generally no. If a dismissed employee worked under a visa sponsored by the employer, the employer is required to inform the Department of Home Affairs (DoHA) in writing within 28 days of the dismissal, usually via a “Notice of Sponsorship Changes” form.

There are no specific notification obligations after making the redundancies. Only general notification obligations, which are the same for all employment terminations, apply.

These general notifications must be made within eight days, using the relevant forms, to: (i) the employee’s health insurance company; and (ii) the District Social Security Administration (including the pension insurance record sheet).

If wage deductions were made to satisfy the employee’s debt to a third party, the employer must notify the relevant court (or tax authority case of tax debt), including an account of the deductions.

An employee can make either:

(a) An unfair dismissal claim, in the Fair Work Commission. To make such a claim the employee must have six months’ service with the employer (12 months for a small business). Employees earning more than the high-income threshold are also excluded unless they are covered by a modern award or enterprise agreement

(b) A claim that the dismissal was unlawful. These claims generally involve two steps: conciliation and/or investigation by a first body; followed by referral to a court or tribunal if the matter is not resolved at the first stage. The forum may vary:

1. Many claims under the federal “Fair Work” legislation are initially made in the Fair Work Commission. Following unsuccessful conciliation they are filed in the Federal Court of Australia, Division 2 of the Federal Circuit and Family Court of Australia, or (much less commonly) a State court exercising federal jurisdiction.
2. If the dismissal is alleged to have been prohibited by Commonwealth legislation dealing with age, sex, racial or disability discrimination, the complaint is initially made to the Australian Human Rights Commission, following which, absent resolution, it is heard by a federal court.
3. If the dismissal is alleged to have been prohibited by State or Territory anti-discrimination legislation, a complaint is initially made to a relevant anti-discrimination body. If the matter is not reserved it is decided by a State or Territory court or tribunal.

In many “Fair Work” claims a union can bring a claim in its name on behalf of a member employee, or a person who is eligible to be a member. In other cases the employee must bring the claim themselves, but their union can represent them.

An employee may challenge the validity of a dismissal for redundancy if they consider that the statutory conditions were not met. First, the employee who wishes to remain employed must inform the employer without undue delay after the termination notice that they insist on continuing their employment. Second, the employee must file a lawsuit at the district court of the employer’s seat (residence or registered address). The lawsuit must be made within two months from the date on which the employment should have ended. After the two months, the right to file the lawsuit expires.

If the dismissal for redundancy is found invalid, the employee who wishes to remain employed remains to be employed at the original position under the original conditions and is entitled to a full compensation of salary for the whole time from the invalid termination until work is assigned again, or until the employment is validly terminated (ie, including the time of the court proceedings). The court may reduce the amount of such compensation if, for example, the employee has found another job in the interim, or could have found one.

There’s no statutory authorisation for unions to raise any claims at the court on behalf of employees except for insolvency proceedings (see question 21). However, only attorneys at law can represent employees fully and without limits in any proceedings. Another natural person can be granted a power of attorney in a specific case (not repeatedly). Theoretically, this could be a member or employee of the unions, but this is not a market standard.

Yes, particularly for more senior employees.

Yes, it is very common and highly recommended to terminate the employment by mutual agreement when making employees redundant. The termination agreement does not have to state any reasons for termination. However, should the reason be redundancy of the employee, the employee is entitled to statutory severance payment regardless. To motivate the employees to conclude the termination agreement, it is a market standard to offer a higher severance package than the statutory severance payment.

This varies significantly. As a very general rule of thumb, individual redundancies may be concluded in a matter of weeks, while collective redundancies can take one to two months. The length of the redundancy process will depend on the circumstances, such as the matters raised by employees or unions during consultation, the complexity of the restructure, the possibility of redeployment and the seniority of affected employees.

Individual redundancies generally take around two to three months. The organisational change must be prepared, and the termination agreement negotiated or the termination notice given. In case of the notice, the statutory notice period is two months. There’s no statutory notice period requirement in case of agreement, therefore it can be faster. It can also take longer (eg, more complicated cases, restructuring, C-level or other higher managers).

For collective redundancies, the process takes several months (at least three) due to higher demands on preparation, more complicated structuring, the consultation process, and the notification obligation to the Labour Office.

No, though hiring a new employee to perform substantially the same work as a retrenched employee may raise inferences about how genuine the redundancy was.

Restructuring/Re-organisation of the business

The statutory law does not expressly prohibit certain conduct. However, a redundancy means that the employee’s work is no longer needed and therefore any hiring (internal or external) for the same (or largely the same) position should be avoided (or at least thoroughly considered), especially for the two-month period during which the employee can challenge the validity of the dismissal.

Consent is not required. Consultation is only required if it is mandated by a term of a modern award or enterprise agreement. Generally such clauses require consultation on “major change” of certain kinds that is likely to have a significant effect on employees. A transaction that is likely to lead to redundancies will likely be a change of this kind, whereas a share sale where there is a guarantee of continued employment for a period may not.

The term “restructuring” in Czech law means one of the ways of resolving a company’s bankruptcy in insolvency proceedings. During this process, organisational changes including redundancies may occur. This kind of restructuring does not require unions’ consent; however, consultation may be required. Further, unions may represent the employees in insolvency proceedings.

In Czech law, “restructuring” within the meaning of a business transaction or corporate transformation or changes (i.e. not a type of insolvency proceeding) can also lead to transfer of rights and obligations from the employment relationship to another employer (transfer of undertakings), ie, the employee and their employment will be transferred to a new employer as a result of such transaction. In this case, the employer must inform the unions or other representatives (and if there are none, then the individual employees) and consult at least 30 days in advance:

• the effective date of the transfer;
• reasons for the transfer;
• legal, economic, and social consequences of the transfer for the employees; and
• measures to be taken in relation to the employees.

In case of cross-border mergers or spin-offs, the employer also must: (i) inform the employees or unions of their right to get acquainted with the written merger or spin-off project and give written comments on it; and (ii) generally reach agreement with unions regarding the extent and manner of the right of influence of the employees of the successor corporation (for example, in certain cases by electing a certain number of members of supervisory board in a joint stock company) if the seat of the newly formed entity is supposed to be in the Czechia. Further corporate obligations depend on the form of such restructuring.

However, the described labour law obligations don’t apply in the case of mere ownership change of the employer’s company where this has no direct legal implications for the employees (ie, it isn’t a transfer of undertaking or a termination reason).

See question 6. In particular, employees or a union may seek an injunction to prevent the employer from proceeding with a change if required consultation has not occurred.

In general, employees have limited ability to influence the process of business transactions. The consultation process (see question 21) doesn’t have to result in an agreement with or of the unions. The administrative fine for violation of the consultation process is up to 200,000 Czech Koruna. If there are no unions and the employer breaches its information obligation towards the individual employees (see question 21), the law provides no administrative penalty. In each case, the employee could claim compensation for damage if any damage occurred.

There is no particular statutory protection of employees on a business transfer.

Whether employees “automatically” transfer in the event of a business transfer depends on the method adopted.

(a) in a share sale, the employees remain employed by the company which is acquired, so in practice the answer is yes.

(b) in an asset sale, the answer is no.

Following a transfer employees retain the same protections they previously enjoyed, a single caveat: in an asset sale, the new employer may choose not to recognise employees’ previous service for the purpose of determining when they can make an unfair dismissal claim. If this occurs, they will need to wait an additional six (or 12) months to regain the protection of the unfair dismissal regime.

If the statutory conditions for transfer are met, the transfer occurs automatically, ie, neither the original employer, the new employer, the employees, nor the unions can avoid the transfer. An employee may prevent their own transfer only by serving termination notice to the employer before the transfer’s effective date, in which case the employment terminates on the day immediately preceding the transfer’s effective date at the latest. If the employer didn’t inform employee at least 30 days in advance (see question 21), the employee may serve their termination notice within two months after the transfer’s effective date – in which case, only a 15-day notice period applies.

Individual rights and obligations are transferred in full to the new employer. The rights and obligations under the original employer’s collective agreement are also transferred to the new employer, but only for the duration of the collective agreement, and for no longer than to the end of the following calendar year.

Transfer itself is not a statutory reason for terminating the employment. However, a restructuring (organisation change) leading to redundancy may happen before, during, or following the transfer. In such a case, the employee has the same rights as in the case of other redundancies.

If the employee terminates the employment by a notice or by an agreement within two months of the effective date of the transfer, they may raise a claim at court that the reason for termination was a substantial deterioration in working conditions caused by the transfer. If the court confirms it, the employee will be entitled to statutory severance (see question 13).

There is no universal procedure for a transfer of employment. In the event of a share sale, no procedure is required. In an asset sale, the approach will depend on the instruments governing the employment relationship. However, it will generally involve:

(a) the parties to the transaction agreeing how employees’ employment, entitlements etc. will be treated under the terms of the transaction documents;

(b) the first employer consulting with employees about the sale and consequent offers of employment by the second employer;

(c) the first employer providing information to the second employer about the transferring employees;

(d) the second employer providing offers of employment to the transferring employees; 

(e) the transferring employees returning executed copies of the offers of employment; and

(f) the employees’ employment with the first employer ceasing by mutual agreement or with notice.

Since the transfer of rights and obligations under employment law occurs automatically, it is generally sufficient to follow the legally prescribed procedure for a given business transfer. In addition, it is necessary to comply with the information and consultation obligation (see question 21). Further, general reporting and notification obligations to the state authorities apply.

No. Indeed, statutory rules can be an obstacle to harmonization. Where transferring employees were covered by an enterprise agreement, the agreement will “transfer with” the employees and apply to their new employment with the second employer, where four conditions are met:

(a) the employment at the first employer has ended;

(b) within three months of this, the employee becomes an employee of the second employer;

(c) the employee performs the same, or substantially the same work, for the second employer that they did at the first employer; and

(d) there is a ‘connection’ between the first and second employer (which will exist if there is an outsourcing or insourcing of work, the entities are associated, or there is a transfer of or change in use of assets associated with the work done by the transferring employees).

The new employer can apply to the Fair Work Commission to make an order that the enterprise agreement not transfer. Such orders may be granted if, for example, the new employer has its own agreement which provides overall similar or superior benefits to employees, or the transferring agreement is unsuited to the new employer’s business.

The working conditions of the transferred employees cannot substantially worsen. If this were to happen and the employee gave termination notice within two months of the transfer, the employee could claim statutory severance (see question 23).

In addition, the employer must comply with the general principle of equal treatment and ensure equal treatment of both the original and new employees in terms of their working conditions, remuneration, and other benefits, training, and the possibility of promotion.

This depends on the source of the entitlement:

(a) for entitlements set out in an employee’s contract, the answer is usually no, unless there is an express contractual discretion to vary particular terms.

(b) for entitlements set out in an enterprise agreement or modern award, the answer depends on the terms of the contract. It is unlikely an employer could unilaterally reduce remuneration, but often changes to hours can be implemented following consultation.

(c) for benefits conferred as a matter of discretion, and not enforceable under a contract of employment, the answer is likely yes, subject to other claims that might be made (e.g. that the employer made some other binding representation that it would provide the benefit, or that it engaged in misleading and deceptive conduct by representing that it would provide it and not doing so).

If the hours, pay, or benefits are agreed in the employment or other contract, then no unilateral change can be made.

Working hours – either statutory weekly working hours apply (40 hours per week) or shorter working hours are agreed. In either case, the employer determines the distribution unilaterally (subject to complying with statutory rules and limits) unless agreed differently.

Salary – if it isn’t agreed in the employment or other contract, the employer unilaterally determines the salary by an internal regulation or by a salary statement.

Benefits – if they aren’t agreed in the employment or other contract, the employer unilaterally determines the benefits by an internal regulation or by a salary statement.

Yes, although:

(a) it is likely (though not settled) that there is a term implied by law in many or all Australian employment contracts that contractual discretions must be exercised in good faith and for the purposes of the contract; and

(b) if a contract gives an employer too much discretion to vary terms and conditions, it might be alleged that the contract is void.

As for employment terms and conditions in general, if these have been agreed in the employment or other contract, they can be changed only by agreement. Validity of express contractual provision to vary the conditions depends on its structure and which conditions it concerns, and therefore there’s no generally applicable answer to the question.

The Labour Code further allows, in certain cases, a change in type of work, workplace, or employer by a temporary transfer of an employee to a different work position, workplace, or employer. Generally, consent is required; however, in certain cases, the employer can (and in very specific cases, has to) make a temporary transfer unilaterally (for example, if the employee is medically unfit to perform the agreed type of work, or to avert imminent danger). The employer must adhere to strict statutory conditions.

Potentially. This is not possible if a term is contained in a contract which states it can only be varied by written agreement; nor is it sufficient if an award or enterprise agreement requires written agreement to a matter. If however all that is required is agreement or consent, there is no blanket rule that this cannot be inferred from agreement.

Yes, the employee and the employer may agree on certain changes and variations implicitly. However, it is recommended to avoid such situations.

It has no right to force the employee to accept the changes. In short, therefore, it must either persuade the employee, allow them to continue on current terms, or dismiss them.

In the latter respect, it is unlawful to dismiss an employee because they have, or assert, rights under legislation, a modern award or an enterprise agreement. It is however lawful to dismiss them for other connected reasons, e.g. because their job is redundant and cost-saving measures which might have averted the need for dismissals have not been achieved. What is critical is the subjective reasons of the decision-maker(s). This is a highly complex area where advice should be sought.

If agreement is required to vary an employment term or condition, then the only option to vary it is an agreement.

First, the variation may be ineffective, with the result that the employee was entitled to payment at the previous rate, for their previous hours, or otherwise as though the variation had never occurred. Second, the employer may breach the employment contract, enterprise agreement or modern award, exposing them to legal action and remedies (see question 6).

If varied unilaterally in a case where agreement was required, the employee may challenge the variation (depending on the situation, by demanding the employer to: refrain from such conduct, restore the original terms, or compensate the employee for the damage caused by such conduct). Depending on the situation there could also be a risk of administrative penalties.

The law relating to redundancy and the benefits payable under it has been largely stable for approximately 15 years. Insofar as case law developments have driven changes, this has occurred where courts have been strict in applying the exemption that redundancy pay does not arise where a dismissal is due to the “ordinary and customary turnover of labour”. Large contractors such as security and cleaning firms had in the past essentially assumed that the contract-based nature of their businesses meant redundancy payments were never triggered, even if employees moved between contracts or worked for a single customer for many years. A series of claims against large businesses has undermined that view.

Looking further forwards, we think the treatment of redundancies is affected by broader trends and changes we are seeing in this area of practice, including:

• greater union involvement in many workplaces, facilitated by new legislative rights for union delegates in workplaces, which are likely to lead for more robust demands for greater consultation and perhaps involvement in decision-making.
• greater facility for multi-enterprise bargaining, by which unions can seek to extend enhanced redundancy protections and payment entitlements to additional workplaces.
• the ability for unions to bargain on redundancy-related provisions in the knowledge that, following recent changes, their redundancy entitlements can never be reduced by the Fair Work Commission arbitrating an outcome in the face of an intractable dispute.
• question marks over whether the federal government may legislate to deal with the “redundancy” of long-standing independent contractor arrangements, in circumstances where it has already legislated a new framework (commencing in August 2024) for the Fair Work Commission to create new minimum standards for “employee-like workers”. This would be a logical area for scrutiny if large contractors (such as those referred to above) sought to themselves move to contract-based models of engaging labour.

The Czech parliament is currently debating several changes in the area of labour law. However, none of the currently debated changes should affect the answers above.