Employment contract advice and rights.

Forums › Off topic › Employment contract advice and rights.

1 | 2

Paul1977

5171 posts

Uber Geek
+1 received by user: 2192

#2389590 10-Jan-2020 11:09

Thanks for the feedback guys.

Hopefully they'll be able to negotiate terms that they are both happy with, I was just trying to get some general advice "just in case".

I don't want to get into specifics on an open forum, but I think these particular circumstances are greyer than some of the examples being given.

BlinkyBill

1443 posts

Uber Geek
+1 received by user: 1100
Inactive user

#2389719 10-Jan-2020 16:20

I rang my employment lawyer, hopefully the below will assist, relative to redundancy. The words are mine from the conversation, not hers verbatim.

Redundancy is a consequence of the disestablishment of a position, there are other outcomes possible as well.

To disestablish a position you must a) advise this formally and b) give a reasonable business reason for the disestablishment. You can’t disestablish a position because of who holds the position.

Disestablishment is as a result of a proposal to change the nature of a businesses business activities. This proposal must be a) notified and communicated, b) allow for feedback and consultation, and c) consider the feedback.

Sale/acquisition/transfer of a business do not usually incorporate proposals to change the business, but this is not unknown. Mergers are the types of business change that typically incorporate disestablishment, as there may be duplicated positions,but this is not always the case.

The principles of redundancy are covered by NZ employment law which is prescriptive around the necessary processes, timelines, and criteria. It is important to note that you cannot disestablish to get rid of a person you don’t like. Disestablishment and possible redundancy is relative to the position, not the person.

9 out of 10 times, sale/acquisition/transfer of staff from one business to another involves a new employment contract, and the principles of reasonableness apply to contract negotiations.

I hope that helps.

dejadeadnz

2394 posts

Uber Geek
+1 received by user: 2287
Inactive user

#2389830 10-Jan-2020 19:43

BlinkyBill:

Yes, you don’t know what redundancy is. I sold a part of my company affecting 5 employee’s to another unrelated company, about 5 years ago. I was advised by my specialist employment lawyer at the time that this was not a redundancy situation because the 5 people were not impacted by a change in role. Whether or not the employment contract terms changed due to signing new contracts I don’t know. All 5 signed, but that may have been because of the sweetener (retention payment) I and the new employer paid.

I was told at the time that the Employment Relations Act 2000 was the relevant legislation.

I think if you review the linked Employment NZ page, you will see that redundancy may follow a restructure depending on whether or not the employee accepts the equivalent position at the new company.

Sure Blinky "Company A and Company B are the same if they have the same owners" Bill, I (a barrister and solicitor of the High Court with multiple years of litigation experience -- albeit not in employment law -- and years of practical experience in making determinations on whether operational units of businesses should accept legal advice provided) might not know the law like your great genius does. But apparently your definition of "redundancy" is rather inaccurate according to other lawyers.

Example one:

As a business owner you’ll want to maximise value in your business when you sell it. One way of enhancing value is to manage your employees carefully during the process. If the sale involves selling shares, employment may remain largely unchanged. But, when the assets of a business are sold, employees are likely to be losing their current jobs (although probably gaining new ones with the new owner). This delicate situation needs to be well managed.

...

Usually, this process will involve:
• Talking to your employees about the sale or possible sale as soon as is reasonably possible;
• Discussing with the new employer (the buyer) whether your employees will be offered employment with them and on what terms;
• Telling your employees that it is their choice to transfer or not if they are offered employment, but that their employment with you will end because of redundancy.

The situation being described here is practically on all fours with the OP's wife's situation. The business will no longer be owned by company A but company B. Company B is offering (as alleged by the OP) continuation of employment on quite different terms.

Example two:

One clause which is extremely helpful in sale and purchase situations is a ‘technical redundancy clause’. This is a clause to the effect that where a business is sold but the employee’s position is not otherwise affected by the sale, their employment will be treated as ongoing and the redundancy clause in their employment agreement will not apply. This is mostly relevant where employees are entitled to redundancy entitlements over and above simple notice. If the employment agreement does not have a clause like this, you could potentially find a situation where a person who is made redundant because the business is sold receives their full redundancy entitlement from the vendor, but is then promptly rehired in exactly the same position by the purchaser. A technical redundancy clause prevents employees from double dipping.

Note how the concept of "technical redundancy" is actually recognised (albeit not in the ERA) as a general employment contract/law concept, notwithstanding your rather rude and ignorant assertion to the contrary at another poster? Furthermore, again in context the author's words clearly contemplate that where an employee's role has ended with company A but is otherwise immediately rehired into the same role by B, there is a redundancy of the employee by company A. Because otherwise his advice to insert such a clause into the employee's agreement for company A would make no sense.

BlinkyBill:

I rang my employment lawyer, hopefully the below will assist, relative to redundancy. The words are mine from the conversation, not hers verbatim.

In light of the above simple and rather conclusive findings from a simple search on the internet (note however that all the sources come from specialist employment lawyers at reputable firms), I'll leave people to decide whether it's a good idea to trust second hand "advice" purportedly obtained and then summarised by a person who doesn't understand the concept of each company having its own legal personality over authoritative sources. At a high level, at best this "advice" duplicate what is easily obtained from reputable sources without a great deal of added value and context specificity.

JimmyH

2898 posts

Uber Geek
+1 received by user: 1554

#2390482 12-Jan-2020 09:12

In my experience, this stuff can be very complicated and the devil is in the detail. Stuff that seems simple and obvious to a non-lawyer can turn out to be very different when reviewed by a specialist.

Given that it is your wife's livelihood, don't take random legal advice from people on GZ, or have her try and negotiate herself without knowing what she is doing. Spend a couple of hundred to have a chat to an actual employment lawyer who knows the intricacies. They will advise you on the legal position and what it is appropriate to do next, and then be available to advise further and represent her later if it all gets messy.

I did that a few years ago, and paying for two hours of an employment lawyers time was well worth it. It ensured I knew what my legal position was, and made no mistakes when negotiating. Not cheap, but worth every cent.

Paul1977

5171 posts

Uber Geek
+1 received by user: 2192

#2391385 13-Jan-2020 21:14

Thanks again for all the info everyone.

1 | 2