Employment Agreements now often include “force majeure”, or business interruption, clauses. Their intended purpose is to make sure that an employee understands and agrees that their employment might end without notice if a natural disaster (“an act of god”) or other major event beyond the employer’s control makes it impossible for the relationship to continue: “no work no pay”. They are meant to apply to events that are rare, unforeseen, and unpredictable; for example, earthquakes and floods.
Although these clauses have been around for a long time, they are rarely relied on. The events that trigger them have been rare. Unfortunately, the world is changing. Whether the clauses will be enforceable or not will depend upon how they are written. If the employer can continue in business, even if it is going to lose money or have to shut its doors for a while, it may not be “impossible to continue”. Increasingly there are also likely to be issues as to whether events such as flooding and sea-level rise, and even pandemics, are “unforeseen”.
It is important for employers to be prepared and to avoid acting in too much haste if a major event occurs. Although it may never happen, we can help you to plan for the worst and avoid making costly mistakes.
Contact us: lawyer@btlaw.co.nz
(Posted 15 February 2023)