Findex: Why your farm needs solid employment agreements

Findex accounting and business advisory partner Michelle Turfrey.

OPINION

In today’s challenging economic climate, the importance of robust individual employment agreements cannot be overstated.

Despite agriculture being New Zealand’s largest industry, there is a concerning lack of well-written employment agreements. A clear, tailored employment agreement provides employees with a solid understanding of their responsibilities and agreed-upon terms, helping to ensure smooth operations and prevent costly litigation.

Employment agreements play a vital role, not only as a legal requirement but also in kick-starting a strong and positive working relationship. They set out the expectations of both parties, setting a solid foundation towards a successful and productive relationship. As laws, industry standards, and the specific needs of your role evolve, your employment agreements should adapt too.

When you’re busy on the tools or dealing with the myriad considerations in front of you for the week - weather conditions, livestock management, crop health, machinery maintenance, supply chain logistics and market demands - sorting out or updating paperwork can be hard to get to.

We understand. However, the issues we see are unfortunately common and could have been avoided with an employment agreement featuring good farming-specific clauses and proper oversight and application of the agreed terms and conditions.

Employment agreements should include standard wages or salary, as well as non-cash perks specific to your workplace, such as meat allowances, dog food, vet bill coverage, and service tenancies for accommodation. They should outline the employees’ duties and responsibilities, seasonal needs of the farm, and agreed terms and conditions to provide the basis for a fair and reasonable resolution should any issues arise.

What could go wrong, you ask? There have been numerous instances in the agriculture industry where a lack of clarity over the terms of an employment agreement has led to disagreements over wages, working hours and job responsibilities.

For instance, if an employer requires employees to work additional hours without proper consultation or compensation, this can be unlawful. Proceedings over employment agreement clauses, unjustifiable actions or dismissals, or breaches of employment terms are frequent causes of litigation. Claims for unpaid wages or large payouts of poorly managed annual leave can cripple a business.

Farming in New Zealand often involves various types of employment, including permanent, fixed-term and casual agreements.

Fixed-term agreements can be used for seasonal work, such as during calving, planting, or harvesting periods, and must clearly state the reason for the fixed term and its duration. Casual agreements are suitable for work that is irregular or on an as-needed basis, such as relief milkers, offering flexibility to both parties. It’s important to understand the differences between each type of relationship and capture these terms in the employment agreement accordingly.

For both employers and employees, having a well-drafted employment agreement is key to fostering a harmonious and efficient farming operation. They can also protect both the employer and employee if things don’t work out. By clearly outlining expectations and responsibilities, these agreements help prevent legal action and ensure a productive work environment.

The Findex human resources and health and safety team offers specialised advice to agriculture businesses across New Zealand, including expert guidance on crafting and managing individual employment agreements. Contact us at findex.co.nz.