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The Importance of Employment Agreements

15 March 2019

In our everyday work it is still a common occurrence for us to see employees who do not have written employment agreements and employers who have not provided written employment agreements to their staff. We also from time to time see of employment agreements that are outdated or contain illegal provisions .

Putting everything else aside a good recruitment practice of any business sets out the tone of a the employment relationship right from the onset and a part of this process is to have a well written employment agreement that ensures that the employee and employer have clear expectations about the role and the working conditions. It also helps employees to know what is expected from them and what they are entitled to without any ambiguity.

Starting Point

Every employee must have a written employment agreement or at the least must be offered one by the employer

Section 63A of the Employment Relations Act 2000 requires employers to provide an employee with a written employment contract (individual or collective). The employment agreement should be signed by the employee and the employer and a signed copy should be retained by each party.

We are often asked by employers – what if the employee won’t sign an agreement ? Well you might think that if are employing someone a good idea is to make the offer conditional upon them signing and returning the Agreement. And that even if an employer mistakenly starts someone without getting a signed agreement back, if they have at least provided an agreement that can be relied upon by the employer as being the agreed terms and conditions. EXCEPT employers can’t rely upon a 90 day trial unless a written employment agreement containing a 90 day trial clause is signed before the employee starts work

What should be in an employment agreement

As a starting point employment agreements should include:

  • the names of the parties,
  • description of the work to be performed,
  • hours and days of work (or an indication),
  • review process and how often,
  • any specific rules within employment,
  • provisions relating to redundancy and restructuring,
  • notice periods
  • public and annual holidays entitlements
  • sick leave and bereavement leave entitlements,
  • health and safety requirements,
  • remuneration details,
  • resolution of employment relationship problems, an explanation of how employment relationships problems will be resolved including advice that personal grievances must be raised within 90 days.

These are just a starting point, there are multiple more clauses that can be added depending on the nature of the role and industry eg Restraints of Trade , non – solicitation clauses – suspension without pay during a Police investigation – confidentiality clauses – accommodation.

Penalties

It is also important to be aware that penalties may be awarded under Section 64 of the Employment Relations Act if no written employment agreement is provided. Penalties can be up to $10,000.00 for individuals and $20,000.00 for companies. Increasingly these are being sought by disaffected employees.

This is a good time for all employers and employees to check their employment agreements to ensure they comply with minimum standards set out above and to ensure that they are compliant with new legislation to be implemented this year. Employers may also have policies which may need updating.

If you need help regarding any advice or amendments please get in touch with one of our Employment team or contact Jill Henderson who will team you up with the best person to suit your individual requirements.