KEY POINTS:
Q: I have been working for an international company (A) over two years. Normally I should get redundant package if I've been laid off. What happens now is A company sold the business to another international B company. Unfortunately B company does not recognise my two years' service for A company. I feel this is unfair to me. Also, should I get redundant package from A company if I denied offer from B company (even if the offer is equal or better)? Is there anything I can do?
I gather you have been offered employment with the new company. But you are not happy because if the new company makes you redundant, your service with your current employer won't be recognised.
You want to know what redundancy entitlement you will have if you choose not to move to the new company because you don't like the offered redundancy clause.
Your entitlement depends on two things. First, what type of work you do. Secondly, what your current employment agreement says.
The Employment Relations Act 2000 (ER Act) provides special protection for "vulnerable"employees - people usually working in cleaning services or food catering services. Special protection is provided because those categories of workers are considered to be particularly vulnerable to changes of employer.
You should check Schedule 1A of the ER Act to see if you are a vulnerable employee (or you could contact the Department of Labour or an employment law specialist to confirm this). If you are a vulnerable employee then you are guaranteed the right to transfer to the new employer on the "same"terms and conditions you have already and with your previous service recognised. So your previous service would have to be recognised if you were made redundant by the new employer and your existing agreement provides for redundancy compensation calculated according to length of service. Also, you will have the right to negotiate redundancy compensation with your new employer, even if your existing employment agreement does not provide for any redundancy compensation, if you; (a) are a vulnerable employee, (b) transfer to the new employer, and (c) are then made redundant as a result of the sale of the business to the new employer.
If you and the new employer cannot agree on redundancy compensation, the Employment Relations Authority can determine compensation for you.
But if you are a vulnerable employee and you elect not to transfer, the ER Act provides that your entitlement to redundancy compensation will depend on what your employment agreement says. Likewise, if you are not a vulnerable employee, your rights to redundancy compensation will depend on what your employment agreement says.
When the business that employs you is sold, but you are offered employment on the same (or similar) terms with the purchaser, this is often referred to as a "technical redundancy". Technically you are redundant because your current employment will end. But in reality, your job can continue with the new employer.
Employment agreements that provide for redundancy compensation usually deal with these technical redundancy situations in one of two ways. First, an employment agreement might say that in the event of a technical redundancy the employee is not entitled to compensation, only the usual period of notice. For example, your agreement might say that if the business is sold and you are offered employment on the same (or substantially similar) terms, but choose not to transfer, you will not be entitled to any redundancy compensation. If your employment agreement says something like this, then your employer is not obliged to pay you any redundancy compensation if you choose not to transfer to the new employer.
Or secondly, your agreement might say you are entitled to compensation if you are redundant and say nothing at all about the effect of a technical redundancy situation on that entitlement. Check your current employment agreement carefully. If this is the case, you could choose not to move across to the new employer, and take redundancy compensation from your current employer instead.
To summarise, if you choose not to transfer to the new employer, you will not be entitled to any redundancy compensation from your existing employer if your employment agreement says you are not entitled to redundancy compensation for a technical redundancy (for example, if the business is sold but you elect not to transfer your employment on same/similar terms and conditions).
Otherwise, you will be entitled to redundancy compensation from your current employer if your employment agreement provides for it. Also, the new employer must recognise your previous service if you are a vulnerable employee under the ER Act.
As a practical step, you could try to negotiate with the new employer to recognise your current service if you are made redundant in future. Then you will have ongoing employment and good redundancy protection.
* Rani Amaranathan is a solicitor in the employment team of transtasman law firm, DLA Phillips Fox.
