What should be in an Employment Agreement
22 May
Written By Hayley Boud
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
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