NEW ZEALAND Law and Practice Contributed by: Liz Blythe, Troy Pilkington, Emma Peterson and Craig Shrive, Russell McVeagh
• co-operating with the third-party implementation and/or support partner; • limiting the customer’s liability for any delays caused by the implementation partner during tran - sition; and • the right to terminate the contract with the supplier of the cloud solution should implementation under the customer’s contract with the implementation partner fail. A customer is likely to seek similar corresponding pro - visions in its contract with a third-party implementa - tion and/or support partner. Although rarely in the case of commercial off-the-shelf SaaS solutions, suppliers of more business-critical and/or customised software may sometimes agree to place the source code of their proprietary software in escrow for the customer’s benefit. The parties may engage a third-party escrow agent who will keep the source code in escrow and oversee its release. The “release” events for the source code are usually nego - tiated by the parties and may include:
tions on subsequent redundancies by the new service provider. All Other Employees There is no statutory right for any other employees to transfer to the new service provider. As such, the new service provider may – but is not required to – offer such employees employment on whatever terms and conditions it chooses (provided that minimum New Zealand employment law entitlements are met). Market Standard The potential for employee transfers is generally con - sidered part of the broader commercial terms to be negotiated between the parties in New Zealand. This is the case regardless of whether the employees have the right to transfer – in which case, the additional potential liability may affect the contract price – or whether employment would need to be offered to (and accepted by) the employees that were to transfer. There is often a tension between the motivations of the customer and the new service provider when con - sidering the terms and conditions of employment to be offered by the new service provider. Although these are ultimately a matter for the new service provider, this is something in which the customer usually has an interest and about which the customer may wish to make recommendations. The new service provider will typically want to ensure that the terms offered to such transferring employees are consistent with the market and with the terms of other similar employees. The customer will often want to ensure that the terms are the same as – or close to – the current terms and conditions of employment, as this is the best practical way to minimise employment issues. In addition, if the customer’s employees transfer with the outsourcing and there is a contractual entitlement to redundan - cy compensation, the customer will usually want to ensure that (if possible) the offer of employment by the new service provider is such that this compensa - tion is not triggered. There is no statutory entitlement to redundancy compensation or severance in New Zealand.
• termination for cause by the customer; or • the supplier suffering an insolvency event.
5. Employment Matters 5.1 Employee Transfers
There are no rules that apply specifically to employee transfers for outsourcing (as opposed to transfers for other commercial reasons) in New Zealand. Employ - ees are divided into two groups for the purposes of a transfer that arises in the context of a “restructuring” (which includes the outsourcing of work or the sale or transfer of all or part of a business). Cleaning, Food Catering and Security Employees Employees who perform cleaning, food catering or security work have the right to choose to transfer to the new service provider of the work on the same terms and conditions of employment, with service with the past provider recognised by the new pro - vider. Leave entitlements transfer with the relevant employee. However, there are no additional restric -
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