Mergers and acquisitions pose a multitude of problems for HR – especially if the amalgamated business will be based elsewhere.
Organisations often want to keep their best employees in the wake of a merger or acquisition but what happens when the amalgamated business will be based elsewhere? Can you legally require them to relocate?
“I’ve never seen an employment agreement that enables an employer to say; ‘At the moment you’re working from Wellington but if we move our offices we reserve the right to move your job too,” says Peter Chemis, partner with Buddle Findlay.
“If you move the job to Auckland, and it’s the exactly the same job the employee was doing in Wellington, they can still say no and class it as a redundancy because it’s a fundamental change,” explains Chemis. “You would have no power at all if you move like that.”
Chemis says the only situation in which he could reasonably foresee such a provision would be in an employment agreement for a chief executive or senior figure – but even then he questions its enforceability.
“The reality is, if they have that in their contract and the company decides to move, they’re probably going to resign at that point anyway,” he says. “So they’re not particularly powerful provisions.”
Chemis says that convincing employees to move following a merger or acquisition is more of a discussion than a legal issue, so there’s no real need for a formal provision.
However, Chemis says if the relocation isn’t too drastic then employees wouldn’t be able to claim redundancy as it isn’t a fundamental change in the employment agreement.
“If you want to move a kilometre down the road, employees couldn’t argue that it’s a redundancy because it’s the same job, it’s just down the road,” says Chemis. “They just travel a little more or a little less to work every day.”
