Requirement to consult on business decisions that can put jobs at risk has exception
A recent determination of the Employment Relations Authority, Anne Abernethy and Others and Kono NZ LP, underscores the fine balance between an employer's business decisions and the requirement to consult with employees about decisions that put their jobs at risk. The Authority found that consultation with employees was not required where that consultation would require disclosure of confidential information.
Kono NZ LP (Kono) operated a mussel business in Marlborough. In 2023, Kono decided that it needed to sell the mussel business and commenced negotiations for a sale with Talley's Limited.
Kono decided not to consult with its employees about the sale. It considered that meaningful consultation with its employees about the proposed sale of its mussel business would require disclosure of highly confidential financial information. Kono's concerns included that if information about its financial situation or the impending sale became public, it could prompt suppliers to alter terms or cease supply, pushing the mussel business closer to closure.
Kono did not consult with affected employees prior to signing the sale and purchase agreement. Kono only began consulting with employees after the sale became unconditional in late April 2023. The transaction was then completed in late May 2023, at which time the employees’ employment was terminated.
The terminated employees...
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