A sale can affect employees differently depending on whether the buyer acquires business assets or shares in the employing company. Employment New Zealand distinguishes technical redundancy in an asset sale from a share sale, where the employing company generally remains the same.
Start by confirming the proposed structure with advisers. Then map each employee, agreement, role, workstream, leave balance, protection provision, collective arrangement, visa or licence dependency, and any statutory transfer right. Review this guide alongside the asset versus share sale guide, NZ sale process, and seller due-diligence checklist.
Asset sale and share sale: the starting distinction
| Issue | Asset sale | Share sale |
|---|---|---|
| Employing entity | Employment with the seller may end. The buyer may offer employment through a different entity. | The employing company generally remains the same while its shareholders change. |
| Technical redundancy | Can arise when the seller's employment agreement ends and the employee accepts an offer from the buyer. | Employment New Zealand says technical redundancy does not cover a sale or transfer of shares because employment with the business is not affected in that way. |
| Employment agreements | Check notice, redundancy, employee-protection, transfer, consultation, and other relevant terms. A buyer offering work must provide proposed terms for consideration. | Existing agreements generally remain with the company, but other proposed workplace changes still require separate analysis. |
| Specified employees | Additional statutory transfer protections may apply where qualifying work moves to a different employer. | A share sale does not usually move the work to a different employer, but advice is still needed on the actual arrangement. |
| Personal information | Disclosure must be planned for the purpose, information, recipients, timing, access controls, and applicable Privacy Act basis. | |
The label used for the transaction is not enough. Confirm the legal employer, what work is moving, whether roles continue, which entity makes any offer, and what the sale agreement requires.
Employees in an asset sale
Employment New Zealand describes technical redundancy as occurring when a business sells its assets, employment with the old employer ends, and an employee accepts an offer from the buyer. It states that the old employer must give notice of termination and the new employer must provide the proposed employment agreement for the employee to consider and sign before starting work.
This does not mean every employee automatically transfers, receives the same terms, or has the same redundancy entitlement. The outcome can depend on:
- the employee's current agreement and employee-protection provision
- whether the buyer offers employment and the terms of that offer
- notice, redundancy, leave, incentive, and other contractual provisions
- whether the employee is a specified employee with additional statutory rights
- collective agreements, union involvement, consultation, and fair-process requirements
- the sale agreement's treatment of employee costs and obligations
Do not describe an employee as transferred, retained, redundant, or protected until the legal process has been checked for that employee and transaction.
Employees in a share sale
In a share sale, the company remains the employer and its shares change hands. Employment New Zealand says technical redundancy does not cover a share sale because it does not affect a person's employment with the business in the same way as an asset sale.
That distinction does not make employee planning optional. A seller should still identify:
- change-of-control, incentive, bonus, share-plan, and retention provisions
- director, executive, related-party, and seller employment arrangements
- proposed changes to reporting lines, duties, location, hours, systems, or structure
- collective-agreement and union considerations
- privacy controls for workforce diligence
- who can communicate what, and when
If the buyer later proposes workplace changes, those proposals require their own employment analysis and process. A share sale is not permission to pre-decide or conceal employment outcomes.
Employee-protection provisions
Employment New Zealand states that every employment agreement must contain an employee-protection provision covering relevant restructuring where an employer sells, transfers, or contracts out all or part of its business. The provision should describe a fair and reasonable process.
Build a reviewed register showing:
- each employee and the correct signed agreement
- the employee-protection wording
- notice and redundancy terms
- collective or individual status
- amendments, side letters, incentives, and historic variations
- missing, unsigned, inconsistent, or outdated documents requiring advice
Do not rewrite agreements or obtain retrospective signatures merely to improve a sale file. Preserve original records, document gaps accurately, and take advice on remediation and disclosure.
Extra protections for specified employees
The Employment Relations Act provides additional protections for specified employees when qualifying work is restructured and will be performed by a different employer. Employment New Zealand says qualifying employees can have the right to transfer to the new employer on their existing terms and conditions when the statutory requirements are met.
Employment New Zealand lists specified work including:
- cleaning and food-catering services in any workplace
- laundry services in education, health, or age-related residential care
- orderly services in health or age-related residential care
- caretaking services in education
- specified security services such as guarding, on-site CCTV monitoring, crowd control, prisoner escort, mobile patrols, and cash collection
The statutory list, exceptions, eligibility tests, notices, information requirements, election process, and deadlines must be checked against the current law. Do not rely on a general description or the informal label “vulnerable employee.”
Employment New Zealand's current guidance includes minimum notice periods for information and employee elections. These are legal process requirements, not a project timetable. Obtain advice early enough to identify affected employees and sequence the transaction correctly.
Consultation and fair process
A sale process and an employment process are related but not interchangeable. Confidential negotiations do not remove employment obligations. Equally, confidentiality, privacy, stock-exchange, financing, or transaction constraints should not be handled by making premature promises or misleading statements.
Before communication, obtain advice on:
- what decisions are proposed, provisional, conditional, or final
- which entity is responsible for each employment step
- who may be affected and who has additional statutory rights
- what information must be provided and when
- whether consultation or employee feedback is required before a decision
- union, representative, and collective-agreement obligations
- how the transaction timetable interacts with a fair employment process
Record the advice, decision status, communications, feedback, responses, notices, offers, elections, and final outcomes. Use accurate language that preserves the distinction between a proposed sale, an agreed sale subject to conditions, and settlement.
Personal information and buyer due diligence
The Office of the Privacy Commissioner explains that Privacy Principle 11 generally permits disclosure only for the original purpose, a directly related purpose, with the person's authorisation, or under another permitted basis. A confidentiality agreement with a buyer does not, by itself, establish that every employee disclosure is appropriate.
Use staged and minimised disclosure
- Initial assessment: use aggregated and non-identifying workforce information where possible.
- Qualified diligence: provide only information needed for the stated assessment, with redaction and controlled access.
- Preferred buyer: identify the lawful basis and process before disclosing employee-level information.
- Employment implementation: release information needed for lawful offers, consultation, transfer, payroll, or onboarding under adviser-approved controls.
Consider employee names, home addresses, contact details, dates of birth, health information, disciplinary records, performance information, bank details, identity documents, visa records, and individual remuneration separately. Restrict access, keep an access log, use secure transfer, set retention rules, and remove buyer access when the process ends.
Prepare an employee transaction register
| Field | Seller-side purpose |
|---|---|
| Employee and role | Confirm the employing entity, work performed, reporting line, location, hours, and key dependencies. |
| Agreement status | Link the signed agreement, amendments, collective coverage, and employee-protection provision. |
| Entitlements | Record leave, notice, redundancy, incentives, service, and other relevant terms for adviser review. |
| Transaction treatment | Record the proposed structure, work transfer, buyer offer, statutory rights, and unresolved questions without presenting proposals as outcomes. |
| Privacy status | Record what may be disclosed, the purpose and basis, redaction, access level, and disclosure history. |
| Process owner | Assign legal review, seller action, buyer dependency, communication, and evidence. |
Communicating with employees
Employee communication should be accurate, coordinated, humane, and consistent with legal advice. It should not be improvised around rumours or buyer requests.
Plan for these questions
- What is proposed, and what has actually been decided?
- Who is the current and proposed employer?
- Does the employee need to choose or respond?
- What happens to role, pay, service, leave, benefits, location, and reporting?
- What information can the employee review, and who can advise or represent them?
- What is confidential, why, and for how long?
- Who handles questions, corrections, privacy concerns, and individual circumstances?
Do not tell employees that nothing will change unless that statement is accurate, authorised, and supportable. Do not promise continued employment or unchanged terms on behalf of a buyer. Where answers are not yet available, say what is undecided, who owns the decision, and when the next formal update is expected.
Seller checklist before signing
- Confirm asset versus share structure and the legal employer for every affected person.
- Review signed agreements, employee-protection provisions, collective arrangements, and missing records.
- Identify specified employees and obtain specialist advice on statutory requirements and timing.
- Map proposed offers, notices, consultation, elections, payroll, leave, and transition responsibilities.
- Agree the treatment of employee liabilities and costs in the sale documents.
- Approve a privacy-safe diligence plan and employee communication protocol.
- Test that the transaction timetable allows the required employment process.
- Keep an evidence trail of advice, decisions, information, notices, feedback, and outcomes.