So you’ve found the right person for the job, made an them an offer, and they’re keen to come on board. The next step is to send them an employment contract. But what should you put in it and what are the legal requirements?
An employment agreement sets out the terms and conditions of employment. We’ve asked an employment lawyer about what it needs to include.
Choosing the right employment agreement
Eloise Callister-Baker, senior solicitor at MinterEllisonRuddWatts, explains that the law requires employment agreements to be in writing.
The type of employment agreement you choose depends on the type of the employment. Are you hiring for a casual, permanent or fixed-term role?
“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,” says Callister-Baker. “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 someone who works for you for an indefinite duration, on either a full-time or part-time basis.
A fixed-term employment agreement differs in that it is a set duration, with the end of the employment based on a specified date, event or project. For example, they may be used for employees who'll cover someone’s parental leave or who'll work on a specific project of a set duration.
Callister-Baker says there are strict legal requirements that must be followed when preparing a fixed-term employment agreement. It must state how 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?
All employment agreements must be in writing and must include the following:
- 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 to the way the employment will end, as well as the reason for the fixed term ending in that way,” she says.
What are the optional inclusions?
Permanent and fixed-term employment agreements may also include terms that deal with other matters. Callister-Baker says these may include:
- commencement date, term (if applicable) and conditions of employment
- any trial or probationary periods
- any contractual benefits
- KiwiSaver
- leave and holidays (including any annual closedown)
- termination (including clauses dealing with notice, abandonment, medical incapacity and redundancy)
- suspension
- secondary employment and conflicts of interest
- policies
- health and safety (including any drug and alcohol testing requirements)
- expenses and deductions
- confidentiality and intellectual property
- the process for varying the employment agreement.
Where can you go for help?
The Ministry of Business, Innovation and Employment’s website, Employment New Zealand, provides numerous resources on employment.
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 practices in employment law in your area,” she says.
Employment agreements outline the terms and conditions of employment, and they must be in writing. Whether you’re hiring for a casual, permanent or fixed-term role, they all have legal requirements that need to be included before you send them off to be signed.
Information provided in this article is general only and it does not constitute legal advice and should not be relied upon as such. SEEK provides no warranty as to its accuracy, reliability or completeness. Before taking any course of action related to this article you should make your own inquiries and seek independent advice (including the appropriate legal advice) on whether it is suitable for your circumstances.
