Selling a business can be a very complicated process when it comes to managing your obligations under New Zealand Employment Law.

It’s easy to get caught up in all things business but you must remember your legal obligations to the employees, and that includes letting the staff know what is happening. 

This can be a balance act. Balancing your commercial risk and keeping things confidential so early in the process, with meeting your legal obligations under the Employment Relations Act 2000.

It is important that you know the details of all the business’s employees. Check employment agreements and variations, visas, and anything else related to the employees’ terms and conditions, including the relevant notice periods and employee protection provisions. Everything must be legally compliant before the settlement date. 

Are there any vulnerable employees like cleaners or food preparers? If so, they will automatically be transferred to the purchaser company unless they don’t want to be. In which case, they will need to be made redundant, and you’ll have to explain the process to them. 

Are there any employees on an Accredited Employer Work Visa (AEWV)? If the settlement timeframe is too short, the purchaser company may not be able to become accredited in time to keep those employees on, and they will have to be made redundant on the settlement date. Not having a valid visa will mean an employee on an AEWV has to leave the country. 

You will need to go through a consultation process with each individual employee to explain what is happening and the possible outcomes related to their employment. It’s important that the consultation process is genuine too. That means it needs to start before the agreement is unconditional and a final decision has been made. All information given to the employees must be relevant and in a format that is easy to read and understand. 

Don’t be tempted to cut corners, even if you know the employees in the business. We can’t stress enough how important it is that you do everything by the book. An employee can raise a personal grievance, even after the business is sold. 

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