Preston Russell Law - Legal Services for Southern People

Contracting Out of the Employment Act

Saturday, June 26, 2010 by Mary-Jane Thomas, partner category Work to Rule

Employee clients often ask us to check their Employment Agreement before it is signed – which is eminently sensible. It is amazing how often Employment Agreements contain clauses that are actually illegal.

Hidden in the dim dark recesses of the Employment Relations Act 2000 is section 238. Section 238 is very clear in that it says “the provisions of this Act have effect despite any provision to the contrary in any contract or agreement.”

That means that it doesn’t matter what is written in an Employment Agreement if it is contrary to the Employment Relations Act.

It is important for employers and employees to be aware of what they can and cannot put into employment agreements.

We still get copies of so called employment agreements written on the back of the ubiquitous table napkin with references to legislation and entitlements that were out of date years ago.

If you are an employer and you think you are getting a cheap deal because someone has given you a copy of their agreement and they say just alter it to fit, be careful. As one client found out the other day, taking someone else’s employment agreement would have seen them agree to paying employees redundancy compensation that would have been crippling for a small business had they had to retrench. We caught that one just in the nick of time.

Make sure that when you are given, or need, an employment agreement you get it checked out by the professionals in the field, don’t just rely on your mate’s agreement and have a fiddle about with it. Equally please don’t go on a search of the internet and pick out bits you like to put in the agreement. Outer Mongolia may allow children to work for one dollar an hour – we don’t!

My other personal favourites are Agreements that are so complicated no one understands them – even the employer who is asking the employee to sign it.

Finally, remember employers that if you give an employee an agreement to sign they must be given the opportunity to get advice. Give them a copy of the agreement to take away with them and get advice before they sign it.