Navigating the complexities of employment agreements can be challenging, but understanding your rights and responsibilities is crucial for a smooth and fair working relationship. This guide aims to provide essential information to help you comprehend the key aspects of employment agreements.
What is an Employment Agreement?
An employment agreement is a legally binding contract between an employer and an employee. It outlines the terms and conditions of employment, including the rights and obligations of both parties. In New Zealand, every employee must have a written employment agreement, whether they are full-time, part-time, casual, or fixed term.
Who is an employee?
An employee works under the direction and control of an employer, receiving regular wages, entitlements such as leave, and they have their tax, insurance and superannuation obligations handled by the employer. This is different from a contractor, who typically operates their own business, provides services under a contract for services, and is generally responsible for managing their own tax, insurance, and work arrangements.
When you’re preparing an employment agreement, what is important to consider is that regardless of how the working relationship is described in a written agreement, the law will look at the real nature of the relationship and how it operates in practice to determine whether someone is genuinely an employee or a contractor.
Types of Employment Agreements
- Permanent Employment Agreement: This is the most common type of agreement, where the employee works on an ongoing basis until either party decides to end the employment relationship.
- Fixed-Term Employment Agreement: This agreement is for a specific period or project. It must clearly state the reason for the fixed term and the end date.
- Casual Employment Agreement: Casual employees work on an as-needed basis, with no guaranteed hours. They are typically called in to work when required.
Key Components of an Employment Agreement
- Names and Contact Details: The agreement should include the full names and contact details of both the employer and the employee.
- Job Title and Description: Clearly state the employee's job title and a detailed description of their duties and responsibilities.
- Hours of Work: Specify the hours of work, including start and finish times, and any provisions for overtime.
- Wages and Salary: Outline the employee's pay rate, how often they will be paid (weekly, fortnightly, or monthly), and any additional benefits such as bonuses or allowances.
- Leave Entitlements: Detail the employee's leave entitlements, including annual leave, sick leave, bereavement leave, and any other types of leave.
- Probation Period: If applicable, specify the length of the probation period and the conditions for its completion. If an employee has been on a probationary period, their employer must give them a good reason for dismissal and a fair opportunity to resolve any problems first.
- Trial Period: A trial period cannot last longer than 90 days, and it is only enforceable if both the employer and employee agree to the trial in writing in the employment agreement, before the employee starts work.
- Termination Clause: Include the conditions under which the employment can be terminated by either party, including the required notice period.
- Dispute Resolution: Outline the process for resolving any disputes that may arise during the employment relationship.
Rights and Responsibilities
Employees' Rights
- Fair Treatment: Employees have the right to be treated fairly and with respect in the workplace.
- Safe Working Environment: Employers must provide a safe and healthy working environment.
- Minimum Wage: Employees are entitled to receive at least the minimum wage as set by the government.
- Leave Entitlements: Employees have the right to take leave as specified in their employment agreement and under New Zealand law.
Employees' Responsibilities
- Perform Duties: Employees must perform their duties to the best of their abilities and in accordance with the job description.
- Follow Policies: Employees should adhere to workplace policies and procedures.
- Respect Confidentiality: Employees must respect the confidentiality of any sensitive information they have access to during their employment.
Ending an Employment Relationship
To end an employment relationship, either party must give the appropriate notice as specified in the employment agreement. The notice period allows both parties to prepare for the end of the employment relationship and make necessary arrangements.
Dispute Resolution
If any disputes arise during the employment relationship, both parties should try to resolve them through open communication and in good faith. If this fails, they can seek assistance from the Employment Relations Authority, which offers mediation and adjudication services to help resolve disputes.
Understanding your employment agreement is essential for a fair and harmonious working relationship. By knowing your rights and responsibilities, you can protect yourself and ensure a positive employment experience. For more information and resources, visit the Employment New Zealand website or contact us to discuss further.
