by Riki Donnelly, partner
By law, good faith behaviour is required when entering into individual employment agreements. The essence of the obligations imposed on employers by the Employment Relations Act 2000 is to provide employees with the necessary rights to address the imbalance in bargaining power between them and the employer.
Often overlooked are the obligations on employers when offering employment to prospective employees. Let’s consider what must be done.
Provide a copy of the agreement
Just as you wouldn’t sell your house without giving the purchaser a copy of the agreement stipulating its price, it seems obvious to always provide an employment agreement to a potential employee, right?
This is not always the case. Employment that begins with, “Come in and work for us! We’ll sort the paperwork later,” is often the reality for many employment relationships. While the Employment Relations Act 2000 requires employers to provide a written copy of the intended agreement, verbal or oral agreements can still be binding.
However be warned, as verbal agreements may not always have the effect which you hope. This is the case for 90-day trial periods. Despite the form of the employment agreement, any stipulation about a 90-day trial must be in writing and signed by both parties. An employer who doesn’t have a signed 90-day clause cannot seek to rely on an oral arrangement. For example, an employee will not be prevented from taking a personal grievance for unjustified dismissal where the employer seeks to rely on an oral agreement as to a 90-day trial.
Contents of an employment agreement
By law, any individual employment agreement must contain information regarding;
- names of the employee and employer;
- the work to be performed;
- where the work is to be performed;
- work hours;
- wages or salary;
- resolution of employment relationship problems;
- rates for public holidays; and
- protection in restructurings.
Tell them they can get advice on the offer (entitled to independent advice)
The law requires employers to advise potential employees of their entitlement to seek independent advice. It need not be technical legal advice, it may even be advice from a friend or partner; the essence is that it is independent – you are not coercing them into accepting the terms of the agreement.
This part can be done verbally. But common sense dictates that it’s best to write it down, for example in a cover letter or email. That way you will always have proof.
Provide opportunity for independent advice
You cannot just tell potential employees they may seek advice then require them to sign the contract immediately. You must give them a reasonable opportunity to seek the advice. The question of how long will turns on the facts.
For example one or two working days may be fair where an employer urgently needs to cover for someone away on bereavement leave, but unreasonable when hiring someone during business as normal. Generally, it would be best to give them at least a week where possible, and record this in some way. For example a cover letter could conclude with ‘if you wish to accept this offer, please sign and return by 5.00pm on 1 July 2018’.
Respond to concerns about the offer
“Do I really have to take 4 weeks holidays over Christmas?” “What opportunities are there for professional development?”
For inquisitive individuals it’s natural to come back with questions regarding the arrangement. A “take it or leave it” reply isn’t a good faith response. You should treat genuine queries with a genuine response.
The goal here is more authentic bargaining and negotiation. Therefore while you may refuse to change the agreement when the employee asks, responding to concerns and explaining the reason for the clauses is required under good faith.
Employers, the ball is in your court. By putting good hiring practices in place, which incorporate the above steps, you will avoid the potential for oversight. And in the world of employment law, oversight can pretty quickly turn into a headache.