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Outsourcing and the Law

More and more employers in South Australia seem to be making the move and outsourcing parts of their business overseas. This may involve job losses, either by way of redundancy or by otherwise terminating the employment contract, or simply by affecting an employee’s entitlements in the move to outsource.

Under the National Employment Standards introduced in January 2010, redundancy occurs when an employer decides that they no longer want the employee’s job done by anyone and terminates their employment. It can also occur due to:

  • insolvency or bankruptcy;
  • the role being replaced by introducing new technology;
  • business restructuring or relocation;
  • a merger or takeover; or
  • a downturn in business due to lower sales or production.

In cases of genuine redundancy like these, outsourcing may be a viable alternative for the employer to restructure their business in line with market conditions, and in these circumstances it is entirely within the law, presuming the correct procedure has been followed in making any redundancies.

Transfer of business

In a slightly different scenario, when a business changes owners it can also affect an employee’s entitlements. A transfer of business can occur when there is a ‘connection’ between the previous employer and  the new employer; this may include a situation where the previous employer outsources the work the employee does to the new employer, or the new employer stops outsourcing work to the old employer.

For more information on the affects of outsourcing or to discuss any aspect of business or personal law, contact Julia Adlem or Alisha Thompson at Pace Lawyers on (08) 8410 9494.


Julia Adlem

Associate Lawyer