New employer liable for transferring employee benefits

December 16, 2014

in Employment

iStock_000016394154SmallThe Supreme Court has finally settled the issue of whether the prior employer or new employer is responsible for paying accrued benefits such as annual holidays, sick and bereavement leave etc due to employees who are transferring to a new employer pursuant to the provisions of Part 6A of the Employment Relations Act which deal with protected employees.

Under those provisions certain categories of employees (protected employees) are entitled to request transfer of their employment on their existing terms and conditions when one company acquires or takes over business previously undertaken by the employees of the previous employer.

The Supreme Court has held that the new employer was not entitled to reimbursement from the previous employer for untaken sick leave bereavement leave and annual leave that was owing.  This was on the basis that at the time of transfer an employee was not entitled to be paid for any of those benefits as the event entitling payment had not occurred.

The Supreme Court essentially said the new employer should have made adequate enquiry to determine the extent of that exposure and to have provided for reimbursement contractually between the parties before taking over the business.

The legislation provides a statutory framework for disclosure and there would be no point in the disclosure regime if it was not intended to enable the new employer to assess its potentially liability.

This is an issue that has been of some importance for employers and if you require any further information in regard to this please contact us.

If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:

Paul Farry
09 379 0055 or 03 477 8870


The information contained in this publication is intended as a guide only.  It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.

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