Employment and industrial relations implications arising out of Queensland’s contestability reforms

18 November 2013

In 2012, the Queensland Government established an Independent Commission of Audit to provide advice on the State’s financial position and recommend strategies for financial improvement. The Commission’s report was finalised earlier this year and many of its recommendations related to “contestability” whereby the market would be tested to ensure the public is provided with the best services at the best price. The Queensland Government accepted many of the Commission’s recommendations, and has since sought to consider new models of service delivery, which range from outsourcing and co-sourcing, to public-private JVs and partnerships. But what are the employment and industrial relations implications for State government employers in Queensland that decide to privatise any of their current services?

Are State Government employers in Queensland required to ensure their  employees are employed by a private sector provider?

No; State Government employers in Queensland are under no legal obligation to ensure their employees are employed by a private sector provider engaged by way of the contestability reform process. 

That said, there is no legal impediment that prevents these employers from contractually requiring a private sector provider to employ some or all of their employees if they wish to do so.

There are a number of factors that may influence any decision in this respect:

If a State Government employer in Queensland does require a private sector provider to employ its employees:

  • This may limit the interest of private sector providers due to:
    • the potential costs implications arising from any transfer of business; and
    • the potential result that the private sector provider will have a two tiered workforce, with some employees on State Government terms and conditions and others on private sector terms and conditions; and
  • The private sector provider may seek to be compensated for their agreement to employ the relevant employees, either by an adjustment to the purchase price or fee, or reimbursement for the additional staffing costs it must meet under State Government industrial instruments.

If a State Government employer in Queensland does not require a private operator to employ its employees:

  • A smooth transition to the alternative service model may be more difficult to achieve due to a loss of existing experience and knowledge;
  • Additional resistance may be encountered from the relevant employees and their unions; and
  • The employer may have difficulty retaining its employees during the period between deciding to adopt the alternative service model and its implementation.

Ultimately, this is a matter for the relevant State Government employer to determine.  It is our experience that State Government employers in Queensland generally do not require private sector providers to make offers of employment to their employees.  However, our experience in New South Wales is the opposite.

Will the Fair Work Act’s transfer of business provisions be triggered by the adoption of alternative service models?

The transfer of business provisions in the Fair Work Act 2009 (Cth) have been extended to apply to transfers of business from certain State public sector employers (eg. State Government employers in Queensland) to national system employers (eg. private sector providers). 

These provisions have the effect that if a former State Government employee becomes employed by any private sector provider following the adoption of an alternative service model there may be a “transfer of business” such that the industrial instrument/s that applied to the relevant employee would “transfer” with them and continue to apply to their employment with the private sector provider.

A transfer of business will occur in respect of the adoption of an alternative service model where:

  • a State Government employee’s employment with the relevant State Government employer terminates and they become employed by a private sector provider within three months after termination;
  • the work (transferring work) the State Government employee performs for the private sector provider is the same, or substantially the same, as the work they performed for the State Government employer; and
  • the State Government employer outsourced the transferring work to the private sector provider or, in accordance with an arrangement between the State Government employer and the private sector provider, the private sector provider owns or has the beneficial use of some tangible or intangible assets that the State Government employer owned or had the beneficial use of, and that relate to the transferring work.

What will any transfer of employees to a private sector provider mean for the relevant Queensland State Government employer?

Queensland State Government employers must provide their employees with any entitlements that are triggered upon the termination of their employment.  The applicable entitlements will depend upon whether the termination was at the employee’s own initiative, or whether they were terminated by their employer for reasons of redundancy.

Otherwise, any legal responsibilities in respect of those employees’ terms and conditions of employment arising after a transfer of business under the FW Act lie with the private sector provider rather than the Queensland State Government employer. 

What consultation obligations do State Government employers in Queensland have in respect of contestability reforms?

Changes to the Industrial Relations Act 1999 (Qld) introduced by the Newman government have nullified obligations in industrial instruments made under that Act regarding consultation obligations in cases of contracting out, organisational change and termination, change and redundancy.

A Bill is also currently before the Queensland Parliament which, if passed, will further amend the Industrial Relations Act 1999 (Qld) to prevent these types of provisions being included in industrial instruments in the future.

Consultation obligations may also arise under the Fair Work Act 2009 (Cth) if a State Government employer makes a decision to terminate the employment of 15 or more employees for reasons of an economic, technological, structural or similar nature.

These obligations apply even though State Government employers are not “national system employers” for the purposes of the Fair Work Act 2009 (Cth).

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


Jack de Flamingh

Partner. Sydney
+61 2 9210 6192