Your rights: Reasons needed for fixed term

Q. Recently I applied for a job, and went through several assessments and interviews.

After the final interview, the candidates were told that the company would let us know whether we had succeeded. However, I heard nothing and then called the company's HR manager.

He said I had been successful, but that due to some changes in the company I would be put on a temporary three-month contract.

I was so pleased as I wanted the job, but I asked why the contract would be temporary (this was never mentioned before). He wasn't able to tell me.

I am currently working in a stable job and I am not sure if it's worth quitting just to get a temporary contract.

However, if there is a good chance of permanent employment, I would take the opportunity.

What is a temporary contract? Is the employer allowed to give me one? Is it worth quitting my job for?

A. It sounds like you probably want to think carefully before you quit your current job, and, if you can, get some more information about why the company wants to put you on a temporary contract.

A temporary contract most probably means a fixed-term employment agreement.

People are usually employed on "indefinite term" employment agreements. These are agreements that continue until the employee resigns, or until the employer terminates the agreement.

Under New Zealand law, an employer can terminate an employment agreement only "for cause" (this means either misconduct, poor performance, long-term sickness or redundancy).

However, fixed-term employment agreements have definite start and finish dates, and are usually used when employees are hired to work on specific projects.

These sorts of agreements are legal, but the law imposes a couple of requirements. First, an employer must have genuine reasons for the fixed-term agreement.

A fixed term can't be used by an employer as a way of checking out whether the employee is suitable for the job, and it can't use this type of agreement to avoid its legal obligations (for example, as a way of giving itself the ability to dismiss the employee without cause).

The law also requires the employer to tell the employee what the reasons for the fixed term are when they enter the contract.

This obviously hadn't happened in your case.

Understanding these reasons means you can make an informed choice about whether you want the job or not.

If the employer has genuine reasons for the term and has told you what they are, the agreement will end on the expiry date and the employer doesn't have to give you ongoing work.

Conversely, if the employer hasn't complied with the law, it may find that it can't lawfully terminate the agreement because it is actually indefinite.

What should you do? As I said, you should try to get more information about why the company wants to offer you a temporary contract, and then make a choice about whether you want to take the risk that you won't have ongoing work after it ends.

If the company can't or won't give you this information, you essentially have two choices.

The first is to walk away, and stay with your current job (the company's behaviour towards you is probably not a good sign for the future).

The second is to take the job, knowing that if the company tries to rely on the fixed term (and asks you to leave at the end of the three months), you can possibly bring a successful personal grievance because you weren't told the reasons for the term before you signed.

It is possible that the company just wants to put you on a three-month probationary period while it assesses whether you are suitable for the job.

Probationary periods are common but, to be legal, they must be recorded in your employment agreement.

Additionally, the company must have a good reason and follow a fair process if it wishes to dismiss you when (or before) the probationary period ends.

This means that if any performance or conduct issues do arise during the trial period, the employer can't just dismiss you, unless it has given you advice, warnings, and a chance to improve.

* Geoff Bevan is a solicitor with Chapman Tripp. Answers are of a general nature only and should not be substituted for specific legal advice.