Vulnerable Employee Transfers – A Quick Guide for N.Z Employers
Vulnerable employee transfers involve complex considerations and prescriptive compliance obligations for employers to manage.
Employers involved in restructuring, contracting out, contracting in, or business transfers that impact vulnerable employees must carefully manage their obligations under the Employment Relations Act 2000 (‘the Act’). Failure to do so may expose employer’s affected by this area of law to legal risk.
What Are ‘Vulnerable Employee’ Transfers?
Under Part 6A of the Act, certain employees are deemed ‘vulnerable’ and are entitled to special legal protections when their work is affected by restructuring, contracting out, contracting in or the sale or transfer of a business.
Vulnerable employees include those employed in the following sectors:
Cleaning services.
Food catering services.
Orderly services.
Laundry services.
Security services.
These employees employed in these sectors have the right to:
Transfer to the new employer on the same terms and conditions and have their service recognised as continuous, or
Elect not to transfer (with consequences managed under the Act).
These protections are designed to prevent employees from being disadvantaged by commercial decisions beyond their control and ensure the continuity of their employment. Essentially, this category of employees is protected by law and have the right to follow the work when their work is impacted by restructuring.
When Do Vulnerable Employee Obligations Apply?
Part 6A obligations may arise where:
Work is contracted out to a new service provider.
A contract is re-tendered and awarded to a different provider.
A business (or part of it) is sold or transferred.
Services are restructured internally in a way that changes who performs the work.
Importantly, intent is irrelevant. Even well-intentioned commercial decisions can trigger liability if vulnerable employee obligations are not followed. Ensuring the continuity of employment of affected employees is of the utmost importance in this context.
Provide accurate, timely information to affected employees.
Consult in good faith before decisions are finalised.
Incoming employers must:
Receive and properly consider employee information.
Be prepared to accept transferring employees on existing terms.
Failure to provide correct information at the right time is a frequent cause of claims.
Right to Transfer on Existing Terms
Vulnerable employees who elect to transfer must:
Transfer on the same terms and conditions of employment.
Retain continuity of service, including service-related entitlements.
Incoming employers cannot selectively re-employ, renegotiate terms, or require employees to “reapply” for their roles. In the event the incoming employer considers implementing redundancies, they must follow the correct legal process and the law in this area requires them to bargain for redundancy entitlements, i.e. provide redundancy compensation to any affected employee’s who elect to transfer and are subsequently made redundant.
Good Faith Obligations
Both outgoing and incoming employers must:
Act honestly and transparently.
Not mislead or confuse employees about their rights.
Not undermine transfer rights through delay, silence, or informal pressure.
Good faith obligations apply throughout the entire process, not just at decision points.
Common Employer Mistakes
Employers often expose themselves to liability by:
Assuming vulnerable employee provisions do not apply.
Treating the process as a standard redundancy or restructuring.
Providing incomplete or inaccurate information.
Failing to coordinate between outgoing and incoming employers.
Attempting to change terms post-transfer.
Allowing commercial timelines to override statutory obligations.
Practical Guidance for Employers
Employer Pro has a comprehensive Employer Toolkit on managing ‘Vulnerable Employees and Restructuring’, including step-by-step guidelines, practical walk-throughs, legal commentary, various employer-focused template letters for managing the process, election transfer sample notices, employer checklists, disclosure of employee transfer-related information tools, a confirmation of employment sample letter and more.
Recent Media Scrutiny
In 2025, media reports highlighted complaints from former school lunch providers alleging that a major contractor did not meet its statutory obligations to many workers regarded as vulnerable under Part 6A of the Act following a large contract transition.
While no formal Authority or Court ruling has yet been published in that matter, the controversy underscores the legal and reputational risks employers face if they do not properly manage vulnerable employee transfer rights when services are retendered or restructured.
Compliance Warning
Vulnerable employee transfer obligations under Part 6A of the Act are mandatory and strictly applied. Employers who fail to correctly identify vulnerable workers, provide accurate and timely information, consult in good faith, or honour employees’ rights to transfer on existing terms expose themselves to legal and financial risk.
Common compliance failures include treating vulnerable employee transfers as ordinary restructures, relying on assumptions about who is covered, poor coordination between outgoing and incoming employers, and prioritising commercial timelines over statutory obligations. These failures can result in successful personal grievances for unjustified disadvantage or dismissal, compensation awards, penalties, compliance orders and reputational damage.
Bottom line: vulnerable employee transfers require early assessment, careful planning, clear communication, and strict adherence to statutory processes, including applicable timeframes. Employers should not proceed with contracting or restructuring decisions affecting vulnerable workers without ensuring full compliance with Part 6A obligations.
This article is provided for general information only and does not replace professional advice. Employers should seek advice specific to their circumstances from Employer Pro if unsure about managing vulnerable employee transfers and associated legal obligations. Employer Pro has a range of employer focused resources and services available through our competitive Employer Protection Packages.
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