Good faith employment relationships start with ensuring the employee and employer have the same expectations about the role and working conditions. A well-written employment agreement helps the employee and employer to know what is expected from them and what they’re entitled to. This means misunderstandings are less likely to happen and if a problem arises then the employee and employer can refer to the employment agreement for clarification.
Did you know?..
Every employee MUST have a written employment agreement.
An employer must provide an employee with a copy of their individual employment agreement.
Failure to ensure the employment agreement is in writing may result in a fine of $1,000 per employee.
The employment agreement can be either an individual agreement or a collective agreement.
An individual employment agreement should be signed by the employer and employee, although it can still be valid even if not signed.
There are some things that must be in your employment agreement and other things that are usually in employment agreements but don’t have to be, such as your notice period.
Minimum rights (including the minimum wage and annual holidays) are legal requirements and apply even if they’re not in the employment agreement. Your employment agreement can’t reduce these or trade them for other things.
Top Tip #1:
Employers are required to keep a copy of the employment agreement or the current signed terms and conditions of employment. The employer must keep an 'intended agreement' even if the employee hasn’t signed it. Make sure any amendments made to the original agreement are either signed on the document itself or attached to the document showing the employee agreement.
Remember: Employees are entitled to a copy of their agreement on request.
The individual employment agreement must include:
The names of the employer and the employee (to make clear who are the parties to the agreement)
A description of the work to be performed (to make clear what the employee is expected to do). This can be included in the position description
An indication of the place of work
The agreed hours or an indication of the hours that the employee will work, and this includes agreement on any or all of the following:
the number of hours
the start and finish times
the days of the week the employee will work.
The wage rate or salary payable (must be equal or greater than the relevant minimum wage) and how it will be paid (if the employee won’t be paid in cash, this should be in the employment agreement or must be agreed in writing somewhere else)
A simple explanation of how to help resolve employment relationship problems including advice that personal grievances must be raised within 90 days
A statement that the employee will receive (at least) time-and-a-half payment for working on a public holiday
For relevant employees, an employment protection provision to apply if the employer’s business is sold or transferred, or if the employee’s work is contracted out
Any other matters agreed on, such as trial periods, probationary arrangements, or availability provisions
The nature of the employment if the employment is fixed-term.
An employment agreement should contain any other terms and conditions that the employee and employer have agreed to, for example, the notice period required for resignation and termination, a trial period provision, an availability provision, whether the employee can be made to work on a public holiday or an annual closedown.
Top Tip #2:
Employers need to think carefully about the needs of the business before they draft an employment agreement.
For example:
If there is a possibility that they may need to cancel an employee’s shift, then reasonable compensation and a period of notice for this needs to be in the employment agreement.
If the employee is being provided a vehicle as part of their role - is it available for personal use or company use only?
Will the employee be required to travel for work and how will this be compensated?
Is there a drug and alcohol policy in place that involves testing?
What does the company regard as serious misconduct, and if an employee is suspended will they be entitled to be paid during the suspension?
In the rush of finding the perfect person to work for you, often the start date comes and goes, and suddenly the person is now an employee without an agreement! It happens!
This can be awkward and stressful, particularly if you intended them to work for you for only a fixed period of time, and now by default they are permanent and you need them to work public holidays but they have decided they would rather have these off!
Do yourself a favour and take the time before you employ someone to ensure you are both on the same page by having a clear and concise agreement in place. It will save you both a lot of pain and distress in the future. By investing in support and advice you can have a happy and valuable employment relationship with your employees.
10 common mistakes you can avoid by getting help
1. Not having a written agreement at all
Now you know that the employment agreement forms the legal basis for employment. Let Bexs help you get up to speed with personalising your agreements specific to your business needs
2. Not getting the type of agreement right
Under employment law, there are three types of employees: permanent, fixed-term, or casual. Bexs will ensure each of your employees' employment agreements will match the type of work they do, the hours and frequency of their work, and other terms and conditions.
3. Not getting the agreement signed before the employee starts
This will null and void any 90-day trial period you have in place as the courts have deemed that the employee was previously an employee before they signed and therefore a 90 day trial period cannot be used.
4. Not complying with Employment Legislation
Now you know that every employment agreement must have a number of clauses that are legally required (see above). Bexs will ensure your employment agreements comply with the law.
5. Trying to short change employee rights
The employment agreement is the basis of the relationship between you and your employee. Bexs will ensure a watertight agreement which will get you off to a good start and provide an honest foundation to build on.
6. Reusing old templates
Failing to tailor your agreements to each employee means you may miss important things (such as all the mandatory clauses) and put you in jeopardy of not complying with employment law. Bex will personalise the employment agreement which will safeguard you from legal risk, and ensure it is specific to the position, the person, and the needs and goals of your business.
7. Not being clear
Any ambiguity in the agreement could mean that your employee does not know what the business expects of them, and what their obligations and duties are. Bexs will ensure the terms and provisions are all clearly defined, match the reality of the job the person needs to do, will ensure the employment agreement is legally robust, and will greatly reduce the likelihood of problems or disputes down the track.
8. Not following provisions of the agreement
Failure to adhere to the provisions of an employment agreement and act in good faith could mean an employee could successfully challenge you with a grievance. If you decide to include a disciplinary process, Bexs can help with this, however, you must follow the steps you have agreed to.
9. Not keeping Employment Agreements up to date.
Regularly reviewing your employment agreements will also mean you stay compliant with laws and regulations. There are often changes, for example,a change to the minimum wage or how holiday pay is calculated. You don’t want to be caught out because you failed to update the employment agreement. Bexs can regularly review your employment agreements and update them if necessary.
10. Not customising your agreement to suit the needs of your business
A generic agreement, although meeting minimum legal requirements, can be tricky. Unless you have customised the detail (referred to above in top tip) it is unlikely the agreement will accurately reflect your specific employment terms and conditions. This may result in disparities between what the employee agrees to in their agreement and what they experience working for you, which may lead to disagreements, possible disadvantages, and an untenable situation for both parties. Having someone assist you with the detail of your employment environment will ensure everyone is on the same page and has the same expectations.
Rebecca (Bexs) Waterhouse our HR specialist can help with all your HR and recruitment needs. From new staff recruitment, employment agreements, policies and procedures, and employee handbooks to exit interviews. We love to help businesses build and maintain positive workplace relationships.
We are also partnered with Todd & Walker Law’s Employment and Workplace Solutions Team as our preferred legal specialists. Providing support for our clients in employment law, and health and safety. The Todd and Walker team prides themselves on negotiating cost-effective and pragmatic resolutions at an early stage. When a resolution cannot be reached, the team has advocacy experience at all levels, ranging from the Employment Relations Authority to the Supreme Court.
Supporting ambitious New Zealand businesses to thrive.
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