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Case Employers Ordered Compensate Employee Sale Business

Posted on: Oct 11, 2013

When a business is sold, staff must be clearly told what is to happen to their jobs. If employment is to end, the vendor employer must carry out a proper redundancy process. If the purchaser wishes to employ existing staff, it must enter into new employment agreements with those staff. A failure to tell employees exactly what is intended may result in both employers having to pay compensation and lost wages to any misled employees.

Jones v Force10 Ltd and BVS Fresh Produce Ltd [2013] NZERA Auckland 323 concerned issues arising from the sale of a florist business. Force 10 Ltd (the vendor) sold the business to BVS Fresh Produce Ltd (the purchaser). Ms Jones (the employee) was employed by the vendor. The employee said she was told by the vendor and the purchaser that her job was secure. The purchaser maintained that he had said her services were not required. The purchaser took over the business on 1 February 2012 and the employee attended work on that day and on 2 February. On 1 February, the employee assisted with stock-taking on behalf of the vendor and the purchaser.

On 2 February, the employee became upset because of her perception that family members of the purchaser were doing her job. The employee said the vendor rang her and told her that the purchaser did not require her services and that she was dismissed. The vendor denied that he had said that but agreed he had told her to go home for the day. A week later the vendor gave the employee pay for three days’ work and said the vendor and purchaser had both contributed to the wage packet.

The employee brought a personal grievance and claimed she had been dismissed unjustifiably either when the vendor sold the business or when the vendor told her the purchaser did not require her services. The Employment Relations Authority considered who the employee’s employer was and when the employee’s employment ended. The Authority considered that the vendor retained some sort of employment relationship with the employee after the transfer of the business took place, but that the very fact the employee was at work after the transfer of the business indicated that the purchaser was also her employer. The Authority concluded the employee had been unjustifiably disadvantaged by the vendor and unjustifiably dismissed by the purchaser and that liability should be shared between them. They were each ordered to pay the employee $3,000 compensation for hurt and humiliation and $3,000 for lost wages.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.

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