What should be in an Employment Agreement
By Hayley Boud
Every employee must have a written employment agreement and the employer must keep a copy of each employee’s agreement. We advise making sure the agreement is signed prior to the commencement date of employment.
Mandatory Clauses
There are certain clauses that are mandatory in all New Zealand employment agreements. These include:
Position of the employee
Duties of the employee
Type of employment agreement (e.g. fixed contract, permanent, part-time/full-time, casual)
Hours of work
Place of work
Payment of wages (salary, hourly rate, commission)
Public Holidays
Resolving employment relationship problems
Employee protection provision (what happens to employees when business sold)
The parties (employers must use legal name of business )
Employee acknowledgment (for the employee to confirm there is nothing to stop them from taking the job)
Recommended Clauses
There are a number of clauses that are not mandatory but we recommend including in employment agreements. These include:
Trail period
KiwiSaver
Taking money from pay
Annual leave
Sick leave
Bereavement leave
Parental leave
Leave for other reasons
Unpaid leave
Health and safety
Changes to the employment agreement
Confidentiality
Medical examination
Entire Agreement (prevents misunderstandings from discussions during recruitment)
Severability (if one clause is unenforceable/invalid, the rest of the agreement is not affected)
Redundancy
Abandoning employment
Ending employment for serious misconduct
Ending employment – duties of employee
Suspension
Restraint of trade
Non assignment (employee must personally perform the duties)
Clauses worth considering
There are a number of clauses that may be worth including in your employment agreement depending on the circumstances, these include:
Mobile devices and/or use of computers
Parking
Use of vehicle
Pay review
Study entitlement
Annual close-down
Personal protective equipment
Drug and alcohol testing
Copyright and other Intellectual Property
Conflict of interest
Jury service leave
Transfer of public holidays
Cashing-up annual leave
Gratuities (employee not accept any fee/gratuity/commission)
Registration fees (e.g. professional engineers pay for their own registration fees)
KiwiSaver
We recommend including KiwiSaver in the agreement. You will need to decide whether your compulsory employer contributions will be on top of, or included in, the employees total pay. To include employer contributions in total pay you must negotiate in good faith and your employee must agree to it. You will also need to check it doesn’t take them below minimum wage. Please note that compulsory deductions must be made from commencement of the employment.
Remuneration
We note that employees on wages must be paid for every hour they work. A recent case found Smith City in breach of the Employment Relations Act 2000 for expecting their employees to attend 15 minute morning meetings before work and not being paid for that. Also, salaried employees must always earn at least the applicable minimum wage rate (currently at $16.50) which can’t be averaged out over a month or season.
Trial Period
This can only be included if the employee has NEVER worked for the employer previously even if it is for a different position. The employee MUST have signed the agreement with the trial period included BEFORE they start working. The trial period must contain a notice period (e.g. one week) and the employee needs to be dismissed before the trial period ends. A trial period cannot be extended.
Entitled to work in New Zealand
We also recommend checking the employee is a New Zealand citizen/permanent resident or checking their work visa before entering into the agreement.
We recommend seeking legal assistance in drafting Employment Agreements to ensure they comply with the current employment laws in New Zealand and to ensure they cover all that your particular business requires. For more information please call us on 07 838 0808 or email at hayley@ghlaw.co.nz