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Employers – do your employment agreements need a “tune up”?

Employers – do your employment agreements need a “tune up”?

You wouldn’t let your car go for long period without a service or even worse not get it serviced at all. The same should apply to your employment agreements. Too often we come across situations where employment agreements are not in good shape. They may be out of date and no longer reflect the current requirements of the employer or may not include the mandatory provisions required under New Zealand employment legislation. Even worse is the situation where there is no employment agreement in place at all.

Not having up to date and compliant employment agreements with employees is a risk that no employer should take. Not only could it detrimentally impact on the exercise of your rights as an employer, but it will mean that you are in breach of the Employment Relations Act 2000 and you could be potentially subject to serious fines.

A well written employment agreement should not only be tailored to fit your specific requirements, but it must also contain the mandatory provisions which are required under the Employment Relations Act 2000.

These mandatory provisions are:

  1. The names of employer and employee. This sounds straightforward, but it is best to check the employment agreement states the correct employer entity, you’ll be surprised how often it doesn’t. In terms of enforceability it is important the parties are accurate.

  2. A description of the role and required duties. It is important to state this in an employment agreement so that both parties have a common understanding of what is expected of the employee.

  3. The place of work. This could be a fixed location such as an office, or several locations, depending on the job.

  4. The wage rate or salary which will be paid to the employee.

  5. Agreed hours or if no hours are agreed, an indication of the arrangements relating to the times the employee will have to work. As of 1 April 2016, employment laws changed in New Zealand so that employers can not continue to maintain employees on “Zero-hour contracts”. Employers are now obliged to state in the employment agreement the set number of hours or minimum hours agreed to, days of the week and hours required.

  6. An employment agreement must also state if there is an expectation that employees will be required to work on public holidays. 

  7. If you want the ability to deduct amounts from an employee’s wages (e.g. to recoup any overpayment), the agreement must contain an agreement from the employee that this can happen. However, you will still have to consult with the employee before making any deductions.

  8. If the employee will be employed for a fixed term, the agreement must state in writing the way in which the agreement will end and the reasons for it ending.

  9. If the employee is to undertake shift work under the agreement, you will only be able to cancel a shift if the employee’s agreement specifies the minimum amount of notice that must be given before a shift can be cancelled and contains details of reasonable compensation which must be paid if a shift is cancelled without giving the required notice.

  10. A plain language explanation of the services available for resolution of employment relationship problems. This must include a statement that advises an employee that  a personal grievance must be raised within 90 days.

  11. Employment protection provisions which set out what will occur in the event of restructuring, including:

    • a process that the employer must follow in negotiating with a new employer about the restructuring to the extent that it relates to affected employees; and

    • the matters relating to the affected employees’ employment that the employer will negotiate with the new employer, including whether the affected employees will transfer to the new employer on the same terms and conditions of employment; and

    • the process to be followed at the time of the restructuring to determine what entitlements, if any, are available for employees who do not transfer to the new employer

An employment agreement must not prohibit an employee from working for another person (without employer consent) unless you have genuine reasons for the prohibition and there are stated in the employment agreement.

You are legally obliged to keep a copy of the written employment agreement of all your employees (even if the employee does not sign the agreement after you have provided it to them).

If you think your employment agreements could do with a “tune up” we can help. Contact our employment law expert, Catherine Pendleton on (09) 486 2168 or [email protected]

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