Navigating Employee Rights When a Business is Sold
5 May 2025

When a business is sold, employers must balance their legal duty to employees with the practical realities of making a sale. The Employment Relations Act 2000 (ERA) requires employers to keep employees informed about any changes that could impact their jobs and to give them an opportunity to share their thoughts and provide feedback before decisions are finalised. However, this requirement can be challenging when a business sale is involved.


Why This Matters


Selling a business is a complex process and almost always affects employees, because their jobs with the current employer typically end when the sale is completed. The law requires employers to discuss these potential changes with employees before making final decisions. However, sharing sale details too early can be risky for business owners, because it involves sensitive commercial information.


Common Approaches


  1. After-Sale Consultation: Many businesses wait until a sale agreement is signed before discussing the impact with employees. This allows employers to protect confidential business details but does not fully meet the legal requirement for early consultation.
     
  2. Conditional Sale Agreements: Some businesses use conditional sale agreements, meaning the sale only goes through once certain conditions are met. This allows time to consult employees before the sale is finalised; although, it may not fully satisfy the ERA’s requirements.


Protecting Confidential Information


Employers are allowed to withhold certain confidential details from employees if sharing them would harm the business. However, they must have a valid reason for keeping information private. Confidential information, in this case, refers to details shared under an expectation of secrecy.


Finding the Right Balance


Balancing transparency with business interests is challenging. While employers must act in good faith by informing and consulting employees, they also need to protect the business. Exploring different approaches, such as conditional sale agreements, can help businesses navigate this tricky situation while staying as compliant as possible with employment laws.


Recent Case Law


The above issues have been addressed by the Employment Court in 2024 inBirthing Centre Limited v Matas. The Court of Appeal subsequently declined the appeal against the findings brought by the Birthing Centre Limited. The case involved the acquisition of a private birthing centre by the MidCentral District Health Board (“MDHB”). The transaction resulted in the vendor closing its centre, terminating the employment of all midwives, with the MDHB offering them new employment. The MDHB requested that the employees not be informed of the negotiations due to confidentiality reasons and the terms of the agreement were only announced after the transaction was finalised. Although the affected employees were consulted about some terms and conditions of employment with MDHB, the termination and transfer of their employment was effectively concluded by the time they were notified.


Several employees raised personal grievances for unjustified dismissal and breaches of good faith alleging they were not adequately consulted. The key focus of the arguments before the Employment Court were whether the threshold had been met allowing the vendor to withhold details of the sale until completion on the grounds that it was commercially sensitive. The Employment Court held that the vendor had failed to meet its obligations and concluded“a fair and reasonable employer could in the circumstances have considered options for exploring whether it could maintain the integrity of [its] commercial position as well as the DHB’s commercial position, while informing its employees of the proposal in a confidential way”.


The Employment Court further held that the vendor had failed to:


  • consider whether providing information to the union was viable on an embargoed basis;
  • direct employees not to share information during the consultation process;
  • include as a condition of sale that staff be consulted on a confidential basis and their view sought before the sale agreement became unconditional. 


Conclusion


It is necessary to take into account basic employee rights when selling a business. Although it may be important to protect commercially sensitive information, employers need to look at ways to ensure that employees are kept informed about potential decisions which will affect their employment. A business will need objective evidence to justify maintaining confidentiality of information, including evidence of unreasonable prejudice to their commercial position which would occur if they did share information with employees prior to finalising a sale.


If you have any questions or seek advice or assistance, please do not hesitate to contact Brett Vautier or Stephanie Harris.

26 November 2025
Proposed Plan Change 120: What You Need to Know What is PC120 and why does it matter? Auckland Council has proposed a change to the Auckland Unitary Plan called Plan Change 120 (PC120) . This change is about two main things: Rezoning areas of residential land to allow more housing intensification in and around urban centres and transport hubs. Making communities safer from natural hazards like flooding and landslides. Why is this happening? By way of background, PC78 (Auckland’s former intensification plan change, as required by the National Policy Statement on Urban Development 2020) incorporated the Medium Density Residential Standards that were required at the time. Generally, this allowed three dwellings of up to three storeys to be built on most residential sites without the need for resource consent. In August 2025, the Government amended the Resource Management Act 1991 to allow for greater intensification in town centres and around existing and planned transit routes. As a result, PC78 was withdrawn in part by Auckland Council and PC120 was notified. What will PC120 do? Increase housing density within and around town centres and transport hubs. Allow taller buildings: At least 6 storeys within walkable catchments of the city/town centre zone and around existing and planned train and bus routes. At least 10–15 storeys around certain train stations listed in the Resource Management Act 1991. These heights and densities must be enabled unless a ‘qualifying matter’ applies to a site which makes that level of development inappropriate. Natural hazard rules PC120 also introduces stricter rules to manage natural hazards such as flooding, landslides, and coastal erosion. This is a response to recent severe weather events like the 2023 Auckland floods caused by Cyclone Gabrielle. The updated rules and hazard mapping re-classify hazard areas and their risk level and require mitigation measures to be implemented that avoid creating or worsening natural hazard risks. What does this mean for property owners and developers? Expect more multi-storey and apartment-style housing near town centres and transport hubs, and an increase in shared spaces and communal assets. Intensification may lead to issues concerning: Boundary and airspace rights. View and sunlight obstruction. An increase in easements and restrictive covenants in already built-up areas. New subdivision and land uses may only be allowed where the natural hazard risk is considered tolerable or acceptable. Coastal development will become more difficult. The impact of a proposed development on existing floodplains and overland flow paths will be scrutinized. Maintenance or upgrade works may be required to ensure stormwater runoff and flood waters are adequately conveyed. Why should you care? These changes could affect your property rights, development plans, and legal obligations. If you’re buying, selling, or developing land, it’s important to understand how PC120 impacts you. Please get in touch with our property team if you’d like to discuss how these proposed changes could affect your property or future plans. https://www.glaisterkeegan.co.nz/our-expertise/property#CommercialProperty
26 November 2025
Sole v Hutton – disclosure obligations for apartment sales and the importance of thorough due diligence when purchasing In Sole v Hutton [2025] NZHC 430, the High Court dealt with a dispute over undisclosed weathertightness issues in an apartment complex and delivered a strong reminder about vendors’ disclosure obligations. In 2019, the Purchasers (the Soles) purchased an apartment in Mount Maunganui for $1,495,000. Less than a year after settlement, they discovered major weathertightness issues affecting the entire building. The Body Corporate embarked on an extensive remediation project, and the Purchasers were hit with more than $1,300,000 in special levies for their share of the work. The Court found that the Vendors (the Huttons) had attended Body Corporate meetings in 2014 where multiple expert reports highlighted significant leaks and recommended re-roofing and re-cladding of the building. Despite this, the Vendors told their agent that there were no known weathertightness issues and this information was passed onto the Soles. The Court held that:- · The Vendors breached the warranty in clause 11.2(7) of the Agreement for Sale and Purchase of Real Estate, which requires disclosure of any facts that may give rise to liabilities under the Unit Titles Act 2010; · The failure to disclose the reports and the assurance that there were “no issues” amounted to misrepresentation. The Soles were awarded $926,806.48 plus interest in damages, including their share of remedial costs (after a 30% betterment reduction, as the remedial works increased the value of the property), alternative accommodation and general damages for stress and inconvenience. Key takeaways:- · Vendors : Always disclose all known issues including historic reports and AGM minutes, even if you believe the matter has been dealt with or is no longer significant. · Purchasers : Buying a unit title property comes with shared risk. Ensure you complete thorough due diligence including reviewing all Body Corporate records, reports and minutes to understand potential liabilities and future levies. · Risk management : Non-disclosure can lead to expensive litigation, while thorough due diligence can prevent nasty surprises. Thinking of buying a unit title property? Our property team can guide you through a thorough due diligence process so you have a clear picture of any potential liabilities before you buy. This can save you from unexpected costs and disputes down the track. Selling a unit title property? Full and accurate disclosure is not just a legal requirement, it’s the best protection against expensive claims after settlement. If you’re unsure what must be disclosed or how the warranties in the Agreement for Sale and Purchase apply to your situation, get in touch with our property team. We can help you prepare clear, compliant disclosure statements and minimise the risk of future disputes. https://www.glaisterkeegan.co.nz/our-expertise/property#ResidentialConveyancing
26 November 2025
In a significant move to ease housing pressures, the New Zealand Government has passed legislation allowing homeowners to build granny flats—up to 70 square metres—without needing building consent. This change, part of the Building and Construction (Small Standalone Dwellings) Bill, is expected to take effect in early 2026, following the removal of resource consent requirements by the end of 2025. The exemption applies to standalone dwellings that are simple in design, comply with the Building Code, and are constructed by authorised building professionals. While formal building consent is no longer required, homeowners must still notify their local council before starting and after completing the build. This reform aims to increase housing supply, reduce costs, and boost productivity in the construction sector. It offers practical benefits for multigenerational families, rural communities, and those seeking affordable housing options. For clients considering adding a granny flat to their property, now is the time to begin planning. Engaging qualified designers and builders early will ensure compliance with the exemption criteria and avoid delays once the regulations come into force. https://www.glaisterkeegan.co.nz/our-expertise/property#ResidentialConveyancing
Show More