Many legal minds making NZ LAW work

We are an association of independent legal practices, proactively sharing ideas and expertise for the benefit of our clients.

Do all your Employees have Employment Agreements?

Published: 30th November 2016

Author: Richard Hearn, Corcoran French

Published in: Fineprint | Issue #71

And do they comply?

A recent report from Statistics New Zealand suggests that nearly 1 in 10 employees do not have a written employment agreement. Of those who do have written employment agreements, it’s probably fair to say that a proportion of those are not up-to-date. Recent changes to employment law also mean some previously compliant agreements may need revising.
Whether you are an employer or an employee, you should check your employment agreement and make sure it complies with the minimum requirements. If it doesn’t, employees may be missing out on entitlements, and employers could be exposing themselves to increased penalties and claims from employees. Directors and senior business managers can now also be held personally accountable.

Minimum requirements

The Employment Relations Act 2000 (ERA) requires that every employee must have an employment agreement and that agreement must be in writing whether it is for a permanent, fixed term or casual position. The agreement must include the following:

  • Names of the employee and employer
  • A description of the work to be performed by the employee
  • An indication of where the employee will perform the work
  • Any agreed hours of work or, if no hours are agreed, an indication of the arrangements relating to the times the employee is to work
  • The wages or salary payable to the employee, and
  • A plain language explanation of the services available for the resolution of employment relationship problems, including a reference to the period of 90 days within which a personal grievance must be raised.

Employers must retain a copy of the employment agreement.

Within the ERA, there are further specific requirements in relation to certain types of clauses. For example, if the agreement includes a trial period clause, there are specific requirements which must be met if it is to be relied on to end employment within 90 days.

Recent changes

The Employment Standards Bill was enacted earlier this year, with effect from 1 April 2016. It introduced a suite of changes to employment law including some which mean existing employment agreements will need updating. It also toughened the penalties for employers who do not comply with their obligations.

Some of these changes are summarised below. Please see us if you require a more detailed explanation of the changes and what they may mean for you.

Parental leave

Parental leave eligibility was extended to ‘primary carers’ who can include grandparents, aunts and uncles. Those employees on casual and fixed term agreements are also eligible.

Leave entitlements have been extended, and there is now also the option of agreeing to ‘keeping in touch’ arrangements. These are where employees can return to work on a limited basis for up to 40 hours (total) during their leave without losing their leave entitlements. This allows employees to keep up-to-date with any training or changes in the workplace, and to maintain their social and professional bonds.

Zero-hour contracts

‘Zero-hour contracts’ is a colloquial term for employment contracts which require an employee to be available for work, but don’t offer any guaranteed hours or compensate the employee for being on-call. Zero-hour contracts are now prohibited.

Where an employer and employee agree the hours that are to be worked, this must be recorded in the employment agreement. Where particular hours are not agreed, the agreement needs to give an indication of the hours.

Employers who want to be able to require employees to be available for extra work must include an ‘availability’ provision in the employment agreement. This must set out minimum guaranteed hours of work, and any period which the employee is required to be available above the guaranteed hours. Employment agreements cannot contain an availability provision unless the employer has genuine reasons for requiring it and the employee is reasonably compensated for making themselves available.

If the employment agreement doesn’t comply with these requirements, the employee cannot be required to work more than the agreed hours and cannot be treated adversely if they refuse to do this.

Deductions from wages

Currently, employers need the express consent of their employee to deduct any amounts from wages (other than PAYE, etc). Employment agreements commonly contain an agreement to this effect so that the employer does not need to obtain consent every time a deduction needs to be made.

Now, even if the employment agreement contains such a clause, an employer must still consult with their employee before making a deduction. There is also a prohibition on making unreasonable deductions from wages, even if the employee consents to them. An example of an unreasonable deduction might be in relation to theft of the employer’s property by a customer where the employee had no control over it.

Secondary employment

Employment agreements often contain limitations on an employee’s ability to undertake work for other people. These clauses are now subject to a number of limitations.

It’s only permissible to include such a clause if the employer has genuine reasons based on reasonable grounds, and those reasons are stated in the employment agreement. Genuine reasons can include:

  • Protecting commercially sensitive information or intellectual property rights, or the employer’s reputation, or
  • Preventing a conflict of interest that cannot be managed without such a restriction.

A secondary employment clause can only prohibit or restrict other work to the extent necessary having regard to the reasons set out in the agreement.

For agreements that were entered into before 1 April 2016, employers have until 1 April 2017 to remove or amend clauses in existing agreements which don’t comply.

It’s important to get it right

The Employment Standards Bill also made other changes which emphasise the importance of employment agreements:

  • Record keeping requirements have been clarified
  • Penalties have increased
  • Employers can be publically named if they fail to meet minimum employment standards, and
  • People other than the employer (for example, directors and senior managers) can be held liable.

Failing to meet minimum standards can result in penalties and infringement notices being issued. It can also have a significant effect, for example, on an employer’s ability to dismiss an employee.

Check your agreements

This is a good time for all employers and employees to check their employment agreements to ensure they comply with the minimum standards set out above. Employers may also have policies which may need updating.

If your employment agreement doesn’t comply with the new legislation, talk to your employee or employer about amending it to bring it up-to-date. We have experts who can assist.

Related Articles

  • Auckland
  • Bay of Plenty
  • Canterbury
  • Coromandel
  • Gisborne
  • Hawke's Bay
  • Kapiti Coast
  • Manawatu - Wanganui
  • Marlborough
  • Nelson
  • Northland
  • Otago
  • Southland
  • Taranaki
  • Waikato
  • Wairarapa
  • Wellington
  • West Coast

Mike Lucas Law

We are a small law firm based in the business hub of Manurewa, South Auckland, New Zealand.

We are delighted to have many clients in Manurewa and Manukau City, as well as in the wider Auckland region and New Zealand and abroad.

We think the best evidence of the value we add comes from our clients themselves. Our nomination and final position as First Runner up of the highly competitive and prestigious Regional Law Firm of the Year Award 2007 depended on our clients' endorsements of our work.

Region: Auckland

Phone: 09 269 2844

Kaimai Law Limited

Kaimai Law Bethlehem has been based in Bethlehem, Tauranga for nearly a decade, and our new office at The Lakes opened in March 2017.  The majority of lawyers in our professional team at Kaimai Law Bethlehem & Kaimai Law The Lakes has 10 to 30+ years of experience in their respective fields, which means that they have the knowledge required to give you legal advice you can trust. 

Kaimai Law Bethlehem & Kaimai Law The Lakes specialise in all property matters including conveyancing, finance and subdivisions, as well as family law, commercial law, estate planning, estate administration, trusts, wills, employment law and relationship property. Kaimai Law Bethlehem & The Lakes are your one stop law shops in Tauranga.

Region: Bay of Plenty

Phone: 07 579 3316

Malley & Co

Our experienced, solutions-focused team will work hard to get you the best possible outcome, whatever your legal needs.

Region: Canterbury

Phone: 03 379 0712

Purnell Lawyers

There is nothing as inevitable as change. Since opening for business early last century, we at Purnell Lawyers have seen many changes both in name and in the people who have made up the members of our team. We have been privileged to have served the public throughout all of these times. 

We are confident that we will continue to bring top quality legal services to our clients well into the future.

Region: Coromandel

Phone: 07 868 8680

Woodward Chrisp

At Woodward Chrisp we strive to meet the needs of our clients by providing a wide range of high quality legal services within a supportive and collaborative environment.

Woodward Chrisp is the amalgamation of two long established Gisborne legal firms: Woodward Iles & Co and Chrisp and Chrisp. Today’s partners are Ross Revington, Adam Simperingham, Jeff Allen and Ellie FitzGerald.

Region: Gisborne

Phone: 06 869 0900

Gifford Devine

For all life’s matters, the team at Gifford Devine have your back. Since 1896, our lawyers have been providing straight-talking, practical advice and advocacy to people, families and businesses in Hawke’s Bay.

As your legal champions, we’ll serve you as a trusted adviser, listen to your needs, offer plain English advice, and find a solution to get you the best possible outcome.

We have the expertise to identify potential legal issues, to help you make important decisions, and to realise your goals. We’re your legal champions for all reasons and at all stages of life.

Region: Hawke's Bay

Phone: 06 873 0420

BMC Lawyers

BMC lawyers has built a reputation for providing quality service and delivering real results. Our strength is our broad-ranging legal experience that gives us the ability to match clients with the right mix of legal skills for their particular needs.

Our legal professionals are passionate about what they do and work alongside a talented team of support and administration staff to make a real positive difference to our clients.”

Region: Kapiti Coast

Phone: 04 296 1105

Innes Dean Tararua Law

Our history in the Manawatu and Tararua Districts dates back to 1884. With offices in Palmerston North and Pahiatua our firm stands on a long tradition of high standards and sound legal advice.

Our size means that every one of our clients are dealt with on a professional, yet personal basis.

Region: Manawatu - Wanganui

Phone: 06 358 6075

Wain & Naysmith

Based in Blenheim, Wain & Naysmith Lawyers is a full service law firm, and a powerhouse for property, family and business law.

We pride ourselves in providing clear and cost effective legal solutions and practical advice for you, your family and your business.

Region: Marlborough

Phone: 03 520 6103

Knapps Lawyers

As a firm, we promise to look after you and treat you in a manner that we would expect to be treated by a professional services provider; we promise to use every available legal remedy available to us to resolve your issue and to do what you ask us to do in a timely manner.

We will hold in strict confidence all information that we acquire through our work for you and which concerns your business or personal information.  The only exceptions are where you authorise us to disclose such information or where we must do so by law.

Region: Nelson

Phone: 03 544 7888

Thomson Wilson

Thomson Wilson is a full service law firm based in Whangarei. We’ve been trusted lawyers for the Northland community and beyond for 75 years.

We act for individuals and families, businesses, public sector and other organisations. Whether you need no-fuss advice on a simple matter, or a team of legal experts. 

Our staff provide advice in most areas of the law, including property law, business law, trusts and estates, separation and divorce, resource management, criminal law and more.

We also offer expertise in specialist areas such as Maori land, local government law, farming and forestry.

Region: Northland

Phone: 09 430 4380

Berry & Co

Berry & Co is a long established, well respected Otago law firm providing a broad range of legal services for our business and personal clients.

We enjoy working closely with our clients, we listen and then we provide practical commonsense legal advice that achieves the outcome that is desired. We have a reputation for obtaining excellent results.

Region: Otago

Phone: 03 433 0007

Cruickshank Pryde

We are proud to provide a full suite of legal services to the regions of Southland and Central Otago. With our offices, located in Invercargill, Gore and Queenstown, equipped with the latest modern technology, we can service wider New Zealand and international clients with ease. Our areas of expertise include commercial, rural, business, employment, family, criminal, property, resource management and estate planning law.

Region: Southland

Phone: 03 214 4069

RMY Legal

Having been a cornerstone in the New Plymouth and Taranaki legal community since the 1930s we offer in-depth knowledge coupled with legal expertise and always put the needs of you and your business at the heart of what we do.

Not only do we offer a first class service to clients throughout Taranaki, we are passionate about what we do and our success stems from delivering advice in clear and understandable terms.

Region: Taranaki

Phone: 06 769 8080

Le Pine & Co

Le Pine & Co is the largest provider of legal services in the Taupo District, having provided legal services in the Taupo District and the Central North Island since 1953. Le Pine & Co is a full service firm, providing legal services in most areas of the law. The Le Pine & Co team offer a variety of specialised services from offices in Taupo, Putaruru and Turangi. The team are solution focused and will help unravel the mysteries of the law for you.

Le Pine & Co enjoys supporting and contributing to the Taupo community and many of its organisations. Building bike trails with Bike Taupo, setting up trusts for inspiring local projects, supporting the youth of Taupo - the team at Le Pine & Co gets involved in its community in a wide variety of ways. 

Region: Waikato

Phone: 07 378 5030

Gawith Burridge

Gawith Burridge traces its history back to 1875 when Charles Gawith first set up his practice. Since then the firm has undergone many changes, including a merger between Gawith & Co and Burridge & Co in 1998 to form our current practice.

Our firm draws on the breadth of expertise available from some of the region’s most senior legal practitioners, as well as the skills of those who have moved here from larger corporate environments.

As a result, we provide clients with a comprehensive range of legal services right here in the Wairarapa. We can provide you with legal assistance whether you are an individual or a company, with everything from setting up a Will to selling your farming business. 

Region: Wairarapa

Phone: 06 370 0000

Greg Kelly Law Ltd

Greg Kelly Law Limited is a boutique Wellington law firm specialising in trust and elder law. Our practice areas are wills, estates and trusts.

We act for private and institutional clients establishing and administering trusts, wills and estates. We also provide quality advice to legal and accounting firms in New Zealand and overseas. In particular, we can assist with legal opinions, obtaining and resealing probate, and estate and trust litigation.

Region: Wellington

Phone: 04 499 5193

Hannan & Seddon

The Law Firm of Hannan & Seddon dates back to September 1867.

The firm's offices were in Werita Street from 1867 until 1982 when the firm moved to Tarapuhi Street and then to its current spacious premises at 61 Guinness Street in 1998.

The name Hannan comes from Mr Michael Hannan whose son John Hannan (Jack) joined the firm in 1908. Jack Hannan remained in partnership until he passed away in 1974 at the age of 90!

The name Seddon comes from Mr T E Y Seddon (son of Premier Richard John Seddon from Kumara) who joined the firm in the 1920's. The other prominent Solicitor at Hannan & Seddon was Cyril McGinley who joined the firm in the late 1920’s and retired as a Consultant in 1997 aged 87.

Currently we have two Partners within our firm. Tony Sullivan who has been with us for 29 years and Colin Smith, 26 years. The firm also has two long serving Legal Executives Elaine Knowles and Beverley Walsh.  

Region: West Coast

Phone: 03 768 4169

All the information published on this website, or in any article herein is true and accurate to the best of the authors' knowledge. Information on this site should not be a substitute for legal advice. No liability is assumed by NZ LAW Limited, or individual NZ LAW member firms for losses suffered by any person or organisation relying directly or indirectly on information published on this site. Views expressed in any article are the views of the authors individually and do not necessarily reflect the view of NZ LAW or their member firms. Information appearing on this site may only be reproduced with prior approval from NZ LAW Limited Head Office, and credit being given to the source. © NZ LAW Limited