Let's talk law: Top Tips for individual employment agreements

If both parties are happy and flexible, then the terms of an employment agreement will never be looked at again. Photo / 123RF

Brought to you by Treadwell Gordon

A new year brings new beginnings and, for many businesses, new employees and employment agreements.

In our experience, many businesses simply have a basic, outdated, employment agreement which ticks the legal box.

The terms of that agreement are rarely considered before signing and little thought is given to the specific employment scenario or the needs of the business.

In fact, many businesses may be pleasantly surprised by the variety of terms that can be included or amended to advantage the business and ensure they maintain in control of their employees.

One lesser known term which businesses can take advantage of is in relation to KiwiSaver contributions. Without anything in the agreement to the contrary, an employer's KiwiSaver contributions will always be paid on top of employees' remuneration.

However, businesses can take advantage of this clause and record that their Kiwisaver contribution is included in an employees' remuneration. That's 3 per cent on wages saved.

Of particular importance over the public holiday period, is the type of employment agreement chosen – permanent, casual or fixed term.

The favourite pick for businesses seems to be casual employment agreements. But, unless they are used correctly, they pose a real danger to businesses. Desirably, casual employees are not guaranteed any hours and businesses can choose to simply stop giving work to that employee.

However, if casual employees are regularly working the same shifts, they will be converted into permanent employees (despite their agreements saying otherwise) and the business will have to continue to provide them work or go through a redundancy process.

These employees would also then be entitled to an extra day in lieu when working on a public holiday (rather than just the time and a half) and may even be entitled to 4 weeks annual leave on top of their 8 per cent. It would better for businesses to have a permanent agreement in which the hours and offers of work can be managed from the outset or use a fixed term agreement.

Fixed term is rarely used, but often will be the more appropriate and useful choice for business' needs. Fixed terms are exactly that, when the employee is employed for a term that is fixed.

This can either be for a set time e.g. to cover the busy retail Christmas period, or, where the end date is not known, for a set event e.g. to cover maternity leave or for a special project which needs additional staff.

Casual employees sound appealing, but, in fact, what business may actually want are fixed term employees. Especially where a 90 day trial can still be used in a fixed term agreement.

Deduction clauses are another term which is often incorrectly recorded in employment agreements and then too late to change once a business needs to enforce it. It is no longer enough to have a general deduction clause.

Instead, businesses should have a specific deduction agreement which sets out every scenario in which wages may be deducted e.g. annual leave taken in advance, training bonds or service tenancy bonds.

Another top tip is to remove as many "policy" terms as possible from the agreements e.g. internet, drug or incentive scheme policies. Employment agreements cannot be changed without the specific consent of the employee.

Therefore, if policies are included as terms of the employment agreement, it is very difficult for businesses to then make changes as they want.

Instead, these should be standalone policies or included in a "handbook", in which changes only require consultation with employees and are ultimately purely at employers' discretion.

Ultimately, there is no substitute for a good relationship with employees - If both parties are happy and flexible, then the terms of an employment agreement will never be looked at again.

However, every now and then there is an employment relationship which turns sour and businesses are at the mercy of their employment agreements. The terms need to be appropriate and enforceable from the outset and not as an afterthought when it is far too late.

Brittany Gibson, one of the law column writers, from Treadwell Gordon. Photo / File