New IR rules raise merger concerns

The proposed changes to collective agreements released yesterday by the Federal Government could complicate mergers and acquisitions, says law firm Deacon partner Stuart Kollmorgen.

The proposed changes to collective agreements released yesterday by the Federal Government could complicate mergers and acquisitions, says law firm Deacon partner Stuart Kollmorgen.

He says previously, in a case where one business was acquiring another, there was a 12-month period during which the collective agreements of the old operator transferred to the new operator and then expired.

However, under the bill tabled yesterday, the agreements would transfer across for an indefinite period and continue to operate until replaced.

“In practice, it would mean where Company A acquired Company B, employees from B would continue on their collective agreement indefinitely. Company A would have employees working under two different agreements and the former employees of Company B would have little incentive to move to a new collective agreement since their existing one would continue indefinitely,” he says.

The likelihood of mergers and acquisitions is growing as a result of a slowing economy and many will be driven by necessity, says Kollmorgen.

The change could complicate mergers and acquisitions involving Australian companies and potentially make them less attractive, he warns.