Know your rights: Employment agreements

You’ve just received the call you’ve been waiting for – the job is yours if you want it. Now you just need to wait for the written employment agreement to arrive. But what should it include and are there any red flags to spot? 

An employment agreement sets out the terms and conditions of employment. We’ve asked an employment lawyer about what to look out for. 

Casual, permanent and fixed-term agreements – what’s the difference? 

Whether you’ve accepted a casual, permanent or fixed-term role, the law requires employment agreements to be in writing.  

Eloise Callister-Baker, senior solicitor at MinterEllisonRuddWatts, explains that different types of employment require different employment agreements. 

“A casual employment agreement sets out the terms and conditions for an employee who works for an employer on an ‘as and when requested’ basis,” she says. “The employee doesn’t have any guaranteed hours of work, no regular pattern of work, and no ongoing expectation of employment.” 

A permanent employment agreement sets out the terms and conditions for an indefinite length of time, whether it’s a full-time or part-time role.  

A fixed-term employment agreement is for a set duration, with the end of the employment based on a specified date, event or project. For example, you may be employed to cover someone’s parental leave or to work on a specific project of a set time period. 

Callister-Baker says there are strict legal requirements to look out for in a fixed-term employment agreement. It must state the way the employment will end, as well as the reason for the fixed term ending in that way.   

“The reason itself must also be genuine and based on reasonable grounds,” she says.   

“In terms of other differences, fixed-term employment agreements may also include different provisions addressing leave and holidays, particularly if the fixed-term employment agreement is for less than one year.” 

What must be included in an employment agreement? 

If you’ve just received your employment agreement, it’s wise to check it carefully to make sure it includes the following mandatory elements: 

• the names of the employee and employer; 
• a description of the work to be performed by the employee; 
• an indication of where the employee will work from; 
• any agreed hours of work or, if no hours of work are agreed, an indication of the arrangements on the times the employee is to work; 
• the wages or salary payable to the employee; 
• a plain-language explanation of the services available for the resolution of employment relationship problems, including references to the statutory timeframes for raising personal grievances; 
• an employee protection provision; 
• a provision that confirms the employer will pay the employee time and a half if the employee is required to work on a public holiday. 

Callister-Baker notes that fixed-term employment agreements have additional terms that must be included.   

“These terms relate the way the employment will end, as well as the reason for the fixed term ending in that way,” she says. 

Red flags to look out for 

When you receive your employment agreement, it’s worth checking more than the wage, hours and leave clauses.   

Callister-Baker recommends that you carefully review the entire agreement to make sure you are comfortable with and understand its terms. If there’s anything missing or that’s unclear, consider calling or emailing the employer to ask for clarification. 

There are also some red flags to look out for in employment agreements, such as a 90-day trial period provision.   

“Your employer could rely on this provision to terminate your employment agreement during the first 90 days of your employment without process or reason and you can’t raise a personal grievance for unjustified dismissal,” says Callister-Baker. 

She also recommends checking if your salary is inclusive or exclusive of your employer’s contributions to your KiwiSaver and if you are entitled to any redundancy compensation.   

“The law doesn’t require employers to provide redundancy compensation, but it could be a term that you consider negotiating for, especially if the role offered to you is in a sector that is prone to restructuring,” she says. 

The length of the notice period is also worth checking, as well as whether there are different notice periods depending on who ends the employment agreement.  

“A typical notice period is two or four weeks,” says Callister-Baker. “If the notice period in the employment agreement is longer, you may want to consider negotiating for a reduced length.” 

Callister-Baker also recommends checking whether the employment agreement includes any restrictions on trade, including non-competition, non-solicitation or non-dealing restraints. These restraints are designed to protect a business’ commercially sensitive information after you’ve finished working for them. You can read more about them on the Employment New Zealand website. 

“Non-competition restraints can become a huge pain-point for employees when they leave their employment for a new employer,” she says. “If you are offered an employment agreement with a non-competition restraint, you may want to consider negotiating to either remove it, or at least reduce its scope and duration as much as possible.” 

Can you amend an employment agreement before signing it? 

 If an employer offers you an employment agreement or wants to vary your current agreement, you are allowed seek advice about it. They must also consider and respond to any issues that you raise. As part of this process, Callister-Baker says you can propose changes to the agreement for the employer to consider.   

“While the employer does not have to agree to these changes, the individual also does not have to agree to the employment agreement or proposed variation,” she says.  

Where can you go for help? 

If you’re unsure about elements of your employment agreement, the Employment New Zealand website has numerous resources you can draw on. 

Callister-Baker says you can also take legal advice about your employment agreement from a lawyer.   

“The Law Society has a search tool where you can select a practice area and location to find a lawyer who practises in employment law in your area,” she says. 

Employment agreements outline the terms and conditions of employment, and they must be in writing. They can be a daunting part of landing a new job, especially if it’s your first job. But whether you’re starting a casual, permanent or fixed-term role, they all have legal requirements that need to be included. So, be sure to read your employment agreement thoroughly before you sign on the dotted line.