KEY POINTS:
Four weeks ago, we were told by the owner of our gym to attend an urgent meeting with our boss. At the meeting, we were told the business may be sold and the new owners had the right to terminate our employment four weeks after they took over. On top of this, we would not be entitled to redundancy or holiday pay unless we applied to the current management (which is me) before the sale. So we as staff were not sold with the business. Due diligence for the potential buyers was over a couple of weeks ago and the final cut-off date for the pending sale was December 14. But we have not been told of the sale of the business. I have resigned and will leave my role as general manager. Do I or the other staff members have any rights to compensation and do you have any recommendations on how we could move forward from here?
When a business is sold or transferred the new owner is not obliged to offer employment to existing employees or to continue employment.
Employment agreements of all employees who are not classed as vulnerable workers under the Employment Relations Act 2000 must contain an employment protection provision relating to negotiations between the employer and any new employer about the transfer of affected employees to the new employer.
The provisions must include:
* A process that the employer must follow in negotiating with the new employer about restructuring to the extent that this relates to affected employees.
* Matters relating to the affected employees' employment the employer will negotiate about including whether the transfer will be on the same terms and conditions.
* The process to be followed at the time of restructuring to determine what, if any, entitlements are available to employees who don't transfer.
I recommend that you review your employment agreement to determine what is required of your employer under the employee protection provision.
Under the employee protection provision your employer has these obligations:
* As soon as reasonably practicable, taking into account the commercial requirements of the business, commence discussions with the new employer considering the impact of the sale of the business on your position.
* Discuss with the potential new employer whether or not it proposes to offer employment to you and, if so, the terms and conditions it proposes to offer employment to you on and the proposed date for commencement of employment with the potential new employer.
* In the event that you are not employed by the potential new employer, for whatever reason, what your entitlements are (if any).
However, these provisions do not give employees any right to employment with the new owner.
Employees have no entitlement to redundancy compensation unless the employment agreement specifies this. Employers are not required to pay redundancy compensation unless the employment agreement specifies this.
You are absolutely entitled to your holiday pay when your employment ends and need not apply for it.
It is not correct that the new owners can terminate your employment four weeks after they take over.
What they can do depends on how the sale of the business is happening.
If the new owner is buying the shares of the company that employs you, your employment continues as before.
If they decide they do not require your services, they can make you redundant. They would have to give you the notice specified in your employment agreement but they would have to pay redundancy compensation only if that was provided for in your employment agreement.
But if the new owners are just buying the "assets and goodwill", not the shares, your employment with your current employer will end by reason of redundancy when the sale takes place. You may or may not be offered employment by the new owners. You would be entitled to redundancy compensation only if your current employment agreement provided for it.
What you have been told is inaccurate. Your employer has not followed the consultation requirements of the Employment Relations Act. This gives you a basis to claim compensation for distress and humiliation.
You are certainly entitled to your holiday pay - a labour inspector will help you to recover this if the employer fails to pay it.
Your employer appears not to understand its obligations to you - but perhaps you have misunderstood what it is saying: I suggest you try to clarify things in the light of the information I have given you. If your employer confirms what you say above, talk to an employment lawyer.
