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Whether you are preparing to restructure your business, sell, or purchase another business, it pays to be aware of the rules and protections for vulnerable employees in New Zealand. Certain groups of employees have certain protections in restructuring situations. This includes including any workers who do catering, laundry or other caretaking work. These groups can elect to transfer to the new employer on the same terms and conditions during a restructure. 

This article will outline:

  • what groups are vulnerable employees in New Zealand;
  • when their protections kick in; and
  • the practical implications for your business during a restructuring situation.

Who Are Vulnerable Employees?

In New Zealand, vulnerable employees have additional protections in employment law when restructures, or other serious changes occur. This is because the impact of restructuring is more likely to impact these workers. In particular, it is more likely to their work will be outsourced. 

There are different groups of vulnerable employees who fit this description in New Zealand. These include:

  • cleaners and other workers that primarily provide cleaning services; 
  • caterers that work on food catering or related services; 
  • workers who do laundry for organisations in the sectors of education, health or residential care; 
  • orderly workers in the health or residential care sectors; and
  • workers that provide caretaking services to schools or other organisations in the education sector. 

Because these workers face a greater threat of outsourcing, New Zealand employment law aims to provide greater certainty. In practice, these employees have the right to transfer to the new employer if work is outsourced.

What Protections Are There for Vulnerable Employees?

Protections for vulnerable employees kick in during a few specific situations, including when their work is being reformed or restructured. 

Situations when vulnerable employees have additional protections under employment law include when their employer:

  • sells or transfers the business to another owner;
  • outsources the vulnerable employees’ work to another business to perform; 
  • is a contractor and their contract to perform services is granted to another business; or 
  • the employer is a contractor, and their contract to perform services ends as the business or organisation instead seeks to have the services done in-house. 

What Protections Do Vulnerable Employees Have In Those Restructures?

The key protection for vulnerable employees is that they can choose to transfer to the new employer or owner on their existing terms and conditions. This gives vulnerable employees additional protection and certainty in a period that would otherwise see their roles and livelihoods at risk.

Another key protection for vulnerable employees is legal notice requirements. If one of the situations covered above occurs (for instance, if an employer seeks to outsource the work), the employer must tell the vulnerable employee about these restructuring plans at least 20 working days before it takes effect. The other requirement is that the employer must give the vulnerable employees all relevant information about the restructure at least 15 working days before it takes effect. Relevant information includes anything related to the employees’ ability to make an informed decision about whether to transfer to the new employer.

Note that vulnerable employees do not necessarily have to agree to transfer to the new employer. They can seek advice from a lawyer or union advisor and try to request an alternative option such as a redeployment elsewhere in the business.

Key Takeaways

Vulnerable employees in New Zealand have the ability to switch to a new employer on the same terms and conditions if:

  • their current work is contracted out; or
  • a restructure means that a new employer is taking over the business (or their part of the business). 

Outsourcing often happens to work like cleaning, laundry, and catering. A notice period of 20 days exists for vulnerable workers to give them time to seek advice and decide whether to transfer to the new employer. 

If you want to know more about vulnerable employees and the implications for a restructuring process, contact LegalVision’s business lawyers on 0800 005 570 or complete the form on this page.

What are vulnerable employees?

These groups include those who do cleaning, catering, laundry and caretaking; they are sometimes called ‘vulnerable workers’. Vulnerable workers are considered to be at greater risk of losing their job due to a lack of bargaining power and leverage in competitive industries. 

What protections do vulnerable employees have?

The employees will be able to choose whether to transfer to the new employer on their existing terms and conditions. If they choose to do this, they will become employees of the new employer as if nothing had changed.

What kinds of restructures are included?

The most common restructures where vulnerable employees are affected include when an employer sells or transfers the business altogether, or when the employer contracts another business to perform the work that the vulnerable employees were performing.

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