Businesses are sold, contractors change, and companies restructure. Subdivision C of Division 4 of Part III of the Employment Act (Chapter 373) says what may be done with the employment contract when that happens.
Section 25(1) — no transfer without consent
A written contract of service may be transferred, but no rights arising under any written contract of service shall be transferred from one employer to another unless:
(a) the employee who is bound by the contract consents to the transfer; and
(b) the particulars of the consent are endorsed on the contract.
Both limbs are required. A consent given in a meeting and not written on the contract does not satisfy paragraph (b). And the consent must be the employee’s own — consent by a union, a family member or a group representative is not what the section asks for.
Employees do not transfer automatically with the business. Each employee must consent, and the consent must be endorsed on that employee’s contract. An employee who does not consent remains employed by the original employer, whose obligations — including notice, final pay and any repatriation duty — continue.
Section 25(2) and (3) — attested contracts need a labour officer
A transfer of an attested contract is void unless the transfer has been approved by a labour officer.
Before approving, the labour officer must be satisfied under section 25(3) that:
- (a) the employee has freely consented to the transfer;
- (b) the consent is not due to misinterpretation or mistake; and
- (c) the employer has submitted a notice of variation in the prescribed form.
Paragraphs (a) and (b) mirror the section 23 checks made when the contract was first attested. The consequence of failure is severe: the transfer is void, not voidable. The employee remains employed by the transferor, and the transferee has no contract at all.
Section 26 — the transferee takes everything
Where a contract of service is transferred, all the rights, privileges, responsibilities and liabilities, including liability for all wages due and unpaid to the employee under the contract, of the transferor accrued at the time of the transfer are vested in the transferee.
This is a wide provision, and it operates in the employee’s favour:
| What | Effect on the employee |
|---|---|
| Unpaid wages | Claimable from the new employer — expressly named in s 26 |
| Accrued recreation leave | An accrued right; carries over |
| Length of service | Relevant to notice and leave; continuity is preserved by the vesting of accrued rights |
| Deferred wages | Payable by the transferee on demand under s 90 |
| Repatriation liability | A responsibility under the contract; passes under s 26 |
| Housing and rations obligations | Responsibilities under the contract and Parts VIII and IX |
Section 26 makes employment liabilities part of what is acquired. Before agreeing to a transfer of contracts, a purchaser should check the wages register under section 83, the leave records, any deferred wages held under section 85, and any outstanding repatriation entitlements — and price them. Asking the vendor to warrant those figures is ordinary practice.
Section 25(4) — where the employer dies
Where an employer dies, any contract of service in relation to which he is the employer that, at the time of his death, has not been terminated or has not expired, shall be deemed to have been transferred to his legal personal representative.
The employment does not end with the employer. It vests in the executor or administrator, who takes it with all the section 26 consequences. Administration is governed by the Wills, Probate and Administration Act (Chapter 291), and where there is no will the estate may be administered by the Public Trustee.
Note that the deeming is automatic and does not require the employee’s consent — section 25(4) stands apart from section 25(1). The representative may then end the contract by notice in the ordinary way.
Checklist on a transfer
- Get the proposal in writing — who the new employer is, and from what date.
- Check what is preserved — wage, service date, accrued leave, deferred wages, housing.
- Do not consent until the terms are recorded. Consent is your leverage under section 25(1).
- Insist the consent is endorsed on the contract, and take a copy of the endorsed contract.
- For an attested contract, confirm a labour officer has approved the transfer — otherwise it is void.
- Ask for a statement of unpaid wages and accrued leave as at the transfer date; section 26 makes the new employer liable for them.
- If you do not consent, say so in writing and ask the existing employer what it proposes.
Sources
- Employment Act (Chapter 373) — ss 19, 23, 25, 26, 34, 83, 85, 90; Parts VIII and IX
- Wills, Probate and Administration Act (Chapter 291)
- Kinaram v Vanimo Forest Products Ltd [2011] PGNC 137; N4413
- Mamugoba v New Britain Palm Oil Ltd [2024] PGNC 419; N11082
Before relying on anything here, read the current text of the Employment Act (Chapter 373) and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.