Employment Agreements need to be in order or you face enormous liabilities to employees when the Employment Relations Authority dictates what clauses will be in your employees’ agreements.

A recent case of a manufacturer from the South Island highlights the dangers of not having your employment agreements in order.

The employer had a large number of staff, some of whom had been long standing employees.  None had written employment agreements.  Upon sale of the business the employer wanted to ensure that the staff were taken on by the buyer.

However, as nothing was in writing the buyer refused to take on the employees.  The new buyer could not offer the same terms and conditions as no one could say what those terms were.  As a result the employer was exposed to liability for redundancy of all staff, even those taken on by the buyer.

All employment agreements, by law, must be in writing.  If that had been done then the employer, employees and purchasers of the business will know what the terms are.  The vendor and purchaser can then negotiate over which staff will be offered continued employment and know what their respective liabilities will be.

It is also mandatory to include in Employment Agreements provisions to apply if a business is sold or restructured … provisions regarding negotiations with the purchaser on these very issues of staff transfer and redundancy.

To avoid large surprise financial burdens and serious complications on the sale of your business, make sure you have written agreements for all staff and that these are up to date with all legal requirements.