Plain language law

New Zealand law explained for everyone

Companies Act 1993

Voluntary administration - Effect of appointment of administrator

239Y: Effect on employees

You could also call this:

“How an administrator's appointment affects employees' jobs and wages”

When someone becomes an administrator of a company, it doesn’t mean all the employees automatically lose their jobs. The administrator doesn’t have to pay for the company’s promises to employees unless they choose to take on those promises in writing or in a special case.

If you were hired before the administrator came in, they have to pay your wages for the work you do while they’re in charge. But if they tell you within 14 days that your job is ending, they don’t have to pay. They can ask a court for more time to decide about ending jobs.

From the day the administrator starts, you and the company (which might now be run by the administrator) still have to treat each other fairly and honestly. This is called the “duty of good faith” and it’s explained in section 4 of the Employment Relations Act 2000.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321520.

Topics:
Work and jobs > Worker rights
Business > Industry rules
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“Directors' powers are restricted while a company is under administration”

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239Z: Effect on dealing with company property, or

“Rules for property transactions when a company is in administration”

Part 15A Voluntary administration
Effect of appointment of administrator

239YEffect on employees

  1. The appointment of an administrator does not automatically terminate an employment agreement to which the company is a party.

  2. The administrator is not personally liable for any obligation of the company under an employment agreement to which the company is a party, unless—

  3. the administrator expressly adopts the agreement in writing; or
    1. subsection (3) applies.

      1. The administrator is personally liable for payment of wages or salary that, during the administration of the company, accrue under a contract of employment with the company that was entered into before the administrator's appointment, unless the administrator has lawfully given notice of the termination of the contract within 14 days of appointment.

      2. The court may, on the administrator's application, extend the period of 14 days in subsection (3) within which notice of termination must be given, and may extend it on the terms and conditions, if any, that the court thinks appropriate.

      3. From the date of the appointment of the administrator, the duty of good faith set out in section 4 of the Employment Relations Act 2000 continues to apply between each employee of the company and his or her employer (who may be the administrator if the administrator has adopted the employment agreement under subsection (2)).

      Notes
      • Section 239Y: inserted, on , by section 6 of the Companies Amendment Act 2006 (2006 No 56).