1

I have been working with a company for around 7 years. They're now splitting the company and moving a number of employees to the new entity, same owners.

Now they sent an email saying the employees have to sign a letter of resignation (which was attached) and can then sign a contract with the new company. They did say in the email that the change will not impact prior service, vacation entitlements etc, which you hope will be true.

Neither in the resignation letter or the new contract is a mention of what benefits or entitlements will be acknowledge.

From what I found online so far, it suggests that they do not have to honour everything, which makes me think that I may be worse off in case of a dispute in the future. (https://www.fairwork.gov.au/employee-entitlements/when-businesses-change-owners/employee-entitlements-on-a-transfer-of-business)

  1. Does anyone has some advice on how this sort of thing usually works?
  2. Do I really need to resign, before I can work for the new company? (same office, same people, just different entity)
  3. Should the new contract outline what will get honoured from my previous employment?

Thanks for any advise.

4
  • I've tagged this "Austrialia" based on your link to the government site. This kind of thing is very country dependent, so hopefully you'll get better answers this way :)
    – Erik
    Jul 3, 2017 at 7:23
  • 3
    I suggest all the transfers pool the cost and consult a lawyer
    – paparazzo
    Jul 3, 2017 at 9:07
  • 4
    Another consideration for Aus is long service leave. You've been with your employer for 7 years. You don't want that clock being reset because of this change.
    – fubar
    Jul 3, 2017 at 10:59
  • Threat it like a new job: sign your new employee contract BEFORE resigning; the bank, the government, the new company, etc. will see you as a guy with 0 year of seniority, so be prepared if you are soon in a process of a mortgage, the new company may be in a position to be able to fire people more easily from law perspective. Expect that any benefits that is not written in the new contract will be a grey zone where the manager will settle. I recommend to write in the new contract any privileges from the 7 years of seniority and from previous company culture.
    – Tom Sawyer
    Jul 3, 2017 at 15:23

3 Answers 3

4

Disclaimer: This is mostly a legal question, so the exact answer will depend on jurisdiction and other details, such as the type of your contract and of your employer. That said, I hope I can give some general overview.

Does anyone has some advice on how this sort of thing usually works?

While this depends on jurisdiction, usually the general rule is: If a company is sold, all contracts remain valid, and all assets and obligations are part of the package. Specifically, this means that your employment contract remains valid (just with a new counterpart, the new company), and all mutual obligations remain: You still have to work, they still have to pay the same salary, offer the same vacation etc.

Some details may change - for example, the new employer may be able to change the place you work at. There may be specific laws for a transfer of business:

Do I really need to resign, before I can work for the new company? (same office, same people, just different entity)

In principle the business could just keep the existing contracts. In many cases, the new owner will want to change some things - then they will usually have to offer you an amendment to change your employment contract. So I don't think it is necessary or advisable to resign first - ask for a contract amendment instead. Also, resigning could impact your employee rights, such as receiving redundancy payments, so I would strongly advise you not to sign a resignation without expert advice.

Should the new contract outline what will get honoured from my previous employment?

Yes, of course. Outlining what each party gets is the whole point of a contract, without that there is no point in having one. Absolutely refuse to sign a contract if there are parts missing that you were promised. Remember: If it is not in the contract, it does not count.

1
  • Thanks for taking the time and replying to my question. Much appreciated. I'm in discussions now with HR and legal advisers to resolve the matter. Jul 4, 2017 at 3:56
2

There are two possibilities: You stay with your existing job, or you start a new job. If you start a new job, there is no reason why you should start the new job with the company that purchased your company, and not some other company.

Resigning will not benefit you in any way. All that will happen is that you will lose some rights, so don't do that.

You might apply for jobs at other companies (including the one that purchased your company), and then the usual routine is that you wait until a binding contract is signed, and then you give notice at the old company.

If they ask you to resign and re-apply, there are really two possibilities: Either they are trying to cheat you out of your rights, or they are clueless. That should be the first thing to find out.

Snowlockk commented elsewhere: "If they resign doesn't the whole severance process restart? I mean they get paid x number of months for x number of years type of things. So if they resign and the new company retrenches then they loose those years they've worked". Exactly. That might be the reason why they want everyone to resign. You worked 10 years with the old company, so if you get laid off you get tons of severance. If you resign, start with the new company, get laid off after a month, you get nothing.

2

In most places when a company takes over another company, it takes over any existing obligations and contract, including contracts with its employees. They are still bound by those contracts, and many employers simply choose to keep those employees on the old terms.

However this company is clearly indicating that it does not want to do that, but wants to rehire employees under new contracts. This is a viable way forward, and means the new company will not be bound by any previous terms of employment. Here are some things to note.

  1. Talk to your colleagues. Share any information you have. You are in this together and you are going to be in a much better position if you stick together. Anything from the company about how what they say shouldn't be shared is designed to intimidate you, and if you are careful is pretty much unenforceable. You are very probably going to need legal advice at some stage, and if you can get a few of you together and split the cost of a lawyer, one becomes very affordable.
  2. When the company says "the change will not impact prior service, vacation entitlements etc" that does not mean those terms will continue. It means (for example) that any vacation days you have already accrued will be honoured, not that you will get the same vacation allowance in the future.
  3. Your absolutely most important thing is not to resign until you have signed the contract for the new position on terms acceptable to you. Just like you would with any new job, you should be getting the exact terms up front, and you should make sure you have sufficient time to consider them before you accept them and before you resign. Consider them carefully. If, as was suggested, the company is saying you must resign before you can apply for the new jobs, do not do that. Treat it as if you have been given notice of termination - look for another job and make them fire you. Resigning will make you ineligible for unemployment benefits if you don't find another job.
  4. If you do not resign, then generally your contract of employment continues. I say 'generally' because it depends on jurisdiction, which is why I believe you should get a lawyer. They will know for sure. I tell you this so that you do not get pressured into resigning before you see the new terms because the company says "there is a deadline". If they are trying to make you resign before you see the new terms, that means the new terms are not going to be good. Now it is true that the company can fire you if you don't resign, but they probably aren't going to do that just because you are asking for a delay of a few weeks, and they would have to give notice and possibly pay you severance if they fire you. Of course if you don't accept their new terms at all you will probably eventually be terminated.
  5. Whatever the company says, the terms of the new job are negotiable. Do not be afraid to ask for the terms you want. You may not get them, but you may get better than their initial offer. Treat this at all times like a new job offer.
  6. One of the most important things to negotiate is how your previous service will be treated. In other words, if employees in the new company get an extra week vacation after five years, and you have served five years with the old company, it's not unreasonable to expect that extra week of vacation. But to get it you will need to negotiate it specifically. In general ask for your previous service to be considered as service in the new company in all ways. As others pointed out, you currently have legal benefits (like minimum severance payments) based on your length of service. If you resign, all of those benefits are voided, and your years of service counts starts again with the new job.
  7. Research the new company. Research it as if you were applying for a new job there. Look to see what they are offering people in the sort of position you would be working in. Look to see what sort of benefits they give. Check out those employee review sites. While you are doing that...
  8. Start looking around at other possible jobs. You do not know how this is going to work out. The new company may want to you take big pay cuts or other slashes to benefits. Be ready for this possibility. Looking around will also help in negotiating with the new company.
  9. I hope it goes without saying that anything you negotiate, anything they promise, MUST be in the contract, or it isn't going to happen.
  10. Don't assume working at the new company is going to be like working at the old company. You may like the culture and people you are working with, but you can expect some changes in culture and you will probably lose some people, voluntarily or otherwise, in this process. If you are talking to your colleagues you should have some idea of what other people are planning.
4
  • If they resign doesn't the whole severance process restart? I mean they get paid x number of months for x number of years type of things. So if they resign and the new company retrenches then they loose those years they've worked.
    – Snowlockk
    Jul 3, 2017 at 15:01
  • If they resign they got no severance. But yes, a resign and rehire means that if they are laid off in the future then only years of service with the new company will count for future layoff compensation. Jul 3, 2017 at 15:04
  • I think your first two paragraphs are off. This is not an acquisition, but a spinoff and legally the obligations are different. Most of your advice works well in either scenario, though.
    – cdkMoose
    Jul 3, 2017 at 16:01
  • Thanks for taking the time and replying to my question in such detail. It's much appreciated. I'm in discussions now with HR and legal advisers to resolve the matter. Jul 4, 2017 at 3:58

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .