While written employment agreements have been required since the Employment Relations Act 2000 came into force, not all employers have complied with this obligation. In an effort to ensure greater compliance significant penalties can now be imposed on employers who do not have employment agreements with their employees.
We discuss below the requirements for employment agreements that apply from 1 July 2011. These rules apply to all current employees and any new employees employed after 1 July 2011. It is important to note that these rules apply to all employees and therefore cover casual, fixed term and permanent employees.
If you do not currently have written employment agreements with your employees please contact a member of our Employment Law team. We can prepare employment agreements for you which comply with all legal requirements and can be tailored to your business.
Retention of Employment Agreements
It is important employees sign employment agreements before they begin work. Therefore, the employer should ensure the employee receives a copy of the intended agreement a reasonable time before they begin work so the employee can review the terms and seek legal advice if they wish to.
Employers must retain a signed copy of each employment agreement with their employees. Employers should keep a copy of an employee's employment agreement on that employee's personal file.
The requirement to retain copies of employment agreements will also apply to any variations to those agreements.
Employers must also retain copies of intended agreements provided to employees even if the employee has not signed the agreement or agreed to its terms.
Employee's right to request a copy
If requested by an employee, an employer must provide the employee with a copy of their signed employment agreement or the intended agreement.
What must be included in an employment contract?
Various pieces of employment legislation set out the minimum requirements of an employment agreement.
As a minimum, an employment agreement must provide:
The names of the employer and employee;
A description of the work to be performed by the employee;
An indication of where the employee is to perform the work;
An indication of the arrangements relating to the times the employee is to work;
The wages or salary payable to the employee;
An employee's entitlement to be paid time and a half for working on a public holiday;
That an employee is required to work on a public holiday if the employer wishes the employee to work on a public holiday;
An employment protection provision setting out an employee's rights during a restructuring. This must cover the process the employer must follow when negotiating with a new employer, the matters relating to the affected employee's employment that the employer will negotiate with the new employer, and the process to be followed at the time of the restructuring to determine what entitlements are available for employees who do not transfer to the new employer;
A plain language explanation of the services available for the resolution of employment relationship problems, including a reference to the 90 day period within which personal grievances must be raised.
It is also important to note that if you wish to rely on the provisions of the Employment Relations Act 2000 relating to 90 day trial periods, you must include a 90 day trial period clause in your employment agreements and these must be signed by new employees before they begin work.
There are also a number of other provisions we recommend are included in employment agreements to make it clear what the employer and employee's rights and obligations are.
What if the employee has not signed the employment contract?
The Employment Relations Act 2000 now makes it clear that an intended agreement must not be treated as the employee's employment agreement if the employee has not signed the agreement or agreed to any of its terms.
Therefore, it is crucial you ensure your new employees sign their employment agreement before they begin work.
If employers breach these requirements and proceedings are brought by a Labour Inspector, employers could be liable for penalties of up to $10,000 for individuals and $20,000 for companies. However, before a Labour Inspector can bring an action against an employer they must give the employer notice of the breach and seven working days to fix the breach.