Are your current employment agreements putting your business at risk?

Article Published : 01.08.2016

As a specialist employment lawyer I am often contacted by business owners when an employment relationship has become difficult, whether because of poor performance or misconduct by the employee; or because a personal grievance has been raised.  One of the first things I always ask my client for is a copy of the employment agreement.

Since 2000 all employers in New Zealand have been legally required to provide all of their employees with a written employment agreement.  They are also required to keep a signed copy of that agreement on file, yet there are still many employers who are unable to provide a copy of the agreement when they need to.  This significantly undermines the employer’s legal position and also exposes the business to the risk of penalties.

In other cases the employer has ‘built their own’ agreement online or has modified one from another business in order to save costs.  Given that employment law is complex and regularly changing, these agreements generally lack clarity about the key employment terms – like pay, hours and duties.  Even worse, the trial periods and provisions protecting valuable business information and client relationships are often unenforceable.  In many cases, by the time the business owner discovers this it can be too late to do anything about it.

For all of these reasons it is sensible to regularly review the employment agreements used by your business and, at a minimum, to check the following:

  • Does the agreement clearly and accurately record what you expect the employee to do, what hours the employee must work and how much they will be paid?
  • If there is a trial period, does the wording comply with the requirements of the legislation and the courts, and do you know the correct process to follow to ensure that the trial period is valid?
  • If the employee resigns or is dismissed, could there be a risk to your valuable relationships with customers and suppliers, or to your crucial business information?  If so, do you have comprehensive and enforceable restraint provisions in the agreement?
  • Have there been any law changes that mean your agreements need to be updated?
A relatively small investment of time and money in making sure that your employment agreements are up to date and tailored to your business may well avoid many employment problems occurring in the first place, and if they do occur, will put your business in a much stronger position to deal with them.

Please contact Gareth at 03 379 0712 or gareth.abdinor@malley.co.nz to discuss the most effective employment agreements for your business.

Article by Gareth Abdinor

Gareth is driven to build long-term relationships with his clients and to provide them with trusted guidance and practical solutions to their legal challenges. Gareth is an employment law specialist and advises employers and employees on all aspects of the employment process, including documenting the employment relationship, disciplinary processes, terminating employment, employee restraints, health & safety and restructuring.

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