Application
This Policy applies to all departments and public sector bodies of the State of Victoria and their non-executive level employees, as defined under the Public Administration Act 2004 (Vic) (PA Act) and other Victorian legislation.
Overview
The transfer of certain functions across the public sector, or to the private sector, may be necessary from time to time in order to achieve new or shifting Government priorities.
The Government is committed to ensuring that where employees are transferred both between public entities, or to the private sector, that they are transferred on terms and conditions that are no less beneficial overall.
Transfers within the Victorian Public Sector
The PA Act provides for the ability to mobilise employees across the public sector, including to facilitate Machinery of Government (MoG) changes. MoG changes refer to the reallocation of functions and responsibilities between departments and entities across the public sector. In Victoria, the Premier has the sole discretion to recommend such a reallocation. While MoG changes may occur at any time, significant MoG changes usually occur immediately following an election to give effect to any changes to the Ministry and any new administrative arrangements.
A MoG decision to transfer a function between public service bodies or between a public service and a public sector entity (or vice versa), will generally also necessitate the transfer of the staff performing affected functions to the receiving entity. In these circumstances, the PA Act provides that employees will be transferred to the new entity on terms and conditions that are no less favourable overall. In addition to MoG changes, section 28 of the PA Act also gives a public service body head the power to transfer an employee to duties in another public service body or in a public entity. Such transfers must be on terms and conditions of employment that are no less favourable overall and may involve either a permanent or fixed term transfer.
Consultation obligations under enterprise agreements in most cases will not be enlivened by a decision of Government to transfer a function between public service bodies or between a public service and a public sector entity (or vice versa). However, consultation obligations under relevant enterprise agreements may be enlivened in affected departments or agencies where implementing those Government decisions necessitates changes to existing work practices or structures which are likely to have significant effect on employees.
Transfers from the Victorian Public Sector to the private sector
The Government is committed to ensuring, where possible, public-sector work is performed by the public sector. All attempts must be made to continue the performance of this work by the public sector. In circumstances where the Government decides to transfer responsibility for the delivery of services to a private provider, the contractual obligations must specify that the affected employees’ employment terms and conditions must be no less favourable overall and must adhere to the requirements outlined in this policy.
Interaction with the Fair Work Act 2009
Transfers from the public sector to the private sector described under this policy are subject to the application of the transfer of business provisions under the Fair Work Act 2009 (Cth) (FW Act).
A transfer of business is when:
- an employee begins working for the new employer within three months of ending their employment with the previous employer; and,
- the employee’s duties are the same or nearly the same as they were for the previous employer; and,
- there is a connection between the previous and new employers.
There is a connection between the employers where:
- The employers are associated entities as defined by the Corporations Act 2001 (Cth) (for instance, they are related bodies corporate, or one has some controlling interest in the other).
- If the employers are non-associated entities, where:
- there is a transfer of assets from the previous employer to the new employer;
- the previous employer outsources the work the employee does to the new employer; or,
- the new employer ceases outsourcing work to the previous employer.
- there is a transfer of assets from the previous employer to the new employer;
Service with one employer will count as service with another employer if the new employer is an associated entity of the previous employer. Where a transfer of business occurs between non-associated entities, service with the old employer will count as service with the new employer, except where the new employer provides written confirmation to the employee (prior to commencing work) that a period of service with the previous employer would not be recognised.
Where transfer of business provisions under the FW Act apply to the transfer of public sector functions to the private sector, new providers will be required to recognise prior public sector service.
Where there is a transfer of business, transferring employees that were covered by an enterprise agreement prior to transfer will continue to be covered by that agreement. This enterprise agreement will apply until it is terminated or replaced. Employers should ensure transferring employees are not disadvantaged in the terms and conditions of their employment. Alternatively, if the transferring employees were previously covered by an award, they will be covered by the relevant award that covers their new employer (if that award covers their job and industry).
Whether a particular transfer may enliven the transfer of business provisions under the FW Act may involve complex considerations. Legal advice may be required to ensure that a public sector entity is complying with its legal obligations.
Interaction with the PA Act
The PA Act stipulates public sector values and employment principles that Victorian public sector employers are required to apply. Agencies not bound by the PA Act are expected to benchmark against the principles under the PA Act in their contractual obligations. These principles require that employment processes ensure that employees are treated fairly and reasonably, that equal employment opportunity is provided and that employees have an avenue of redress against unfair or unreasonable treatment.
Transfer of functions to a private provider – key principles
Any departures from this operating framework and principles will require the prior endorsement of Government. Agencies are required to contact their portfolio department to discuss any proposals in the first instance.
Employees affected by a transfer of function to the private sector are expected to actively participate in the agreed change processes with the new provider to attain employment.
Public sector employers must comply with their consultation obligations
Public sector employers must consult with their employees and employee representatives about a proposed change that involves a transfer from public to private sector employment and give prompt consideration to matters raised in order to ensure that change initiatives are implemented with the involvement of all relevant parties. Departments and agencies also must adhere to their consultative obligations contained in enterprise agreements, awards or as formalised in departmental or agency internal policy.
Employment offers must be made to pre-existing employees where possible
The Government requires that a private provider make offers of employment to all or most of the pre-existing employees involved wherever practicable. Prior to selecting a new provider, departments and agencies must ensure that any potential provider is aware of their obligations specified in this policy. It is expected that in the majority of cases the new provider would make offers of employment to public sector employees currently performing the work.
This requirement is to support the expectation that private providers engage existing public sector employees, as far as practicable, and subsequently minimise the number of public sector employees who may become redundant as a result of functions being transferred to the private sector. Such offers of employment will precede normal recruitment processes and will allow for reasonable adjustments, including re-training, where employees selected may not meet all the new job requirements.
Employees who accept an offer of employment will be employed on terms and conditions that are no less favourable overall
Where an employee accepts an employment offer with the new provider, the employee will be employed on terms and conditions which, in overall terms, will result in no net disadvantage and are no less favourable than those applying before accepting the employment offer. Departments and agencies are encouraged to consult with the new provider on the terms of their employment offer to ensure it meets these requirements. This is also subject to the transfer of business provisions in the FW Act, or any agreement reached between the employees and the new provider.
Employees who are members of accumulation superannuation schemes can either elect to remain as members of their existing schemes or roll-over their accumulated benefit to a complying fund made available by the new provider. For members of defined benefit funds, the issue of superannuation portability is more complex and would be decided on a case-by-case basis with guidance from the Department of Treasury and Finance, having regard to the principle of no net disadvantage to employees or any increased exposure of the State due to continued membership of the fund. Employees should also seek independent professional advice and carefully consider their personal circumstances prior to accepting an offer of employment. The Employer may reimburse employees for expenses incurred in obtaining financial advice.
Continuity of service for leave purposes will be maintained
If the new provider makes an employment offer to employees and it is accepted, the public sector service of the employees will be regarded as being continuous for leave purposes and employees will retain all service benefits associated with continuous service. Furthermore, subject to the specific partnership arrangements agreed with the new provider and applicable legislation, employees may have the option of either:
- being paid out for any unused accrued annual leave and long service leave; or
- maintaining those leave balances with the new provider.
Maintenance of existing terms and conditions will be accompanied by a commitment from the new provider (again in accordance with contractual terms) to recognise previous public sector service for the purposes of transferring accumulated entitlements, such as sick leave, annual leave, and long service leave.
Agreement will be sought from the new provider agrees that no probation period will apply and to recognise public sector service in the calculation of any subsequent retrenchment payments.
Redundancy and redeployment for employees that are not offered jobs or reject job offers
Employees affected by a transfer of function to the private sector are encouraged to genuinely and actively participate in any employment process initiated by the existing or prospective employer. Employees are also encouraged to consider any offer they receive.
Where a final job offer is not made to an employee by the new provider prior to the date the employee has been declared surplus, or the employee chooses not to apply for a suitable position or they reject or fail to accept a suitable offer of employment with the new provider, a redeployment process within the public sector will begin. This is in accordance with the principles in the Redundancy and Redeployment Policy and delivered under public sector redeployment processes. The redeployment process will commence from the date an employee is declared surplus.
However, if an employee fails to actively participate in employment processes or fails to accept a suitable offer of employment with the new provider, the employee may be ineligible for a redundancy package.
Further Information
For further information and advice employees and public sector union representatives should contact the local Human Resources or People and Culture Unit (or equivalent) of the relevant entity in the first instance.
People and Culture Representatives of Public Sector Entities should contact their Portfolio Department for further assistance in the first instance.
People and Culture Representatives of Portfolio Departments should contact their usual IRV portfolio contact for further assistance in the first instance.
Related Policies or Documents
- Redundancy and Redeployment Policy
- Consultation and Cooperation in the workplace
Updated