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Individual Employment Agreements

5 July 2019

Are you considering selling your business? Or, are you looking to take disciplinary action against an employee, terminate their employment even? Or, are you wanting to protect your confidential information and trade connections?

It is a statutory requirement for every employee to have a written employment agreement (the obligation falling on the employer to provide such an agreement). As well as to comply with the statutory obligation, the purpose of an employment agreement is to ensure that you and your employee are clear on what the employee needs to do, what benefits and obligations have been agreed to, and what to do when things are not going well or you are looking to terminate the relationship.

When creating a new individual employment agreement, there are certain mandatory clauses including:

  1. description of the work to be performed
  2. indication of where the employee is to carry out their work
  3. hours of work
  4. public holiday entitlements
  5. wages or salary payable to the employee
  6. what will happen if you restructure or sell the business; and
  7. explanation of the services available for resolution of employment relationship problems.

There are in addition various legal entitlements that apply in any event; such as, four weeks minimum annual leave. However, it is helpful to include these in the agreement to make it clear to the employee.

It is then up the parties to agree on any additional terms and conditions, which may cover such issues as:

  1. trial or probation periods
  2. use of or provision of vehicles or other equipment
  3. bonuses or additional entitlements
  4. restraint of trade clauses
  5. protection of confidential information or trade secrets
  6. ownership of patents or copyright in works created
  7. health and safety requirements
  8. dealing with medical or sickness events; and
  9. policies concerning behaviour, drug testing, use of email, etc.

If a collective agreement covers your workplace, then any new employee must receive the same, or more favourable, terms for the first 30 days. After which time if they have not joined the union, they can agree to sign a new individual agreement. Special provisions also apply where you are looking to enter into a fixed term employment agreement or engaging part-time or casual employees.

You should remember that once you commence an employment relationship,  it is considerably more difficult to seek changes or introduce new terms or obligations. Similarly, when you come to sell or restructure your business, it is helpful to be able to proceed with some certainty regarding obligations to employees and liabilities arising out of their employment.

We, therefore, strongly advise that prior to taking on a new employee, you do focus on how you would like the relationship to work, and you consider what aspects of your particular business or circumstances might need to be addressed. 

If you would like to discuss any aspect of entering into an employment agreement or would like assistance in reviewing your current employment agreements, we would be pleased to hear from you. Do not hesitate to contact Brett Vautier (DDI: (09) 356 8231; b............@glaister.co.nz)