Are you using the right employment agreement?

Making sure you are using the right type of employment agreement to record employment terms with an employee can be critical for avoiding future issues from arising.  Not only can using the incorrect agreement have significant legal consequences for a business, but it can also have financial implications. 

It is a legal requirement that all employees have a written employment agreement.  This should be provided prior to them starting work and signed by both parties.  For permanent full-time and part-time employees, a standard individual employment agreement can be used.   However, it is important if you have casual or fixed-term staff that they are provided with the correct employment agreement and that these are legally compliant.

For staff who are used to fill unpredictable periods of work, casual employment agreements are recommended.  While there is no legal definition of “casual employee”, it is accepted that they are engaged to work on an “as needed” basis.  They are also not obligated to accept offers of work, nor is an employer obligated to offer work.  This means there should be no regular pattern or work or set hours stated in the employment agreement and it should clearly state that the employee is engaged to work “as needed” and is not required to accept offers of work.   If your business has casual employees who have been offered regular hours of work for more than a few months, there is risk that legally those casual employees could be considered permanent employees.  This has implications for both statutory holiday entitlements and how employment may be ended.  

A fixed-term agreement is used when it has been agreed that an employee’s employment will end on a specific date or event.  For example, to cover a period of parental leave or to work on a specific project.  It is a key requirement of a fixed-term employment arrangement that there are genuine reasons based on reasonable grounds for the fixed term.  It is also critical that this reason is included in the employment agreement. The failure to do this could render the fixed-term invalid.   It is also unlawful to use a fixed-term agreement as a probationary or trial period to assess whether the employee would be suitable for a role.  It is important that fixed-term arrangements end when the agreement specifies.  If an employee continues to work past the end date or completion of a project without a variation to their existing fixed-term agreement, it could be determined that they have legally become a permanent employee. 

It is important to note that employment relationships often change over time.  What may have started out as a casual or fixed-term arrangement could evolve.  It is important to be regularly reviewing these types of arrangements to ensure your employment documentation is up to date and current.

For any further information on casual employment or other employment law queries, please contact Jaime Lomas – jaime@dtilawyers.co.nz