The 10 minimum clauses you must have in your Employment Contracts
Good relationships start with clear guidelines and expectations!
In New Zealand, every employee is required by law to have an employment contract which adheres to the minimum standard of the Employment Relations Act (2000). But an employment contract is more than that, it is also a powerful resource for you and your business.
A clear employment contract can provide a common understanding between you and your employee and ensures misunderstandings are infrequent or non-existent! Employment disputes waste time and money, especially when they can be easily prevented.
But drafting a good agreement can be hard…and confusing!
Engaging an employment lawyer is a costly exercise for a growing business. Using a Free DIY Contract Builder often leave you with a template full of vague and confusing clauses that don’t fit your business. So… you spend hours researching (and plagiarising) contract templates you find on the web. Hours which would be much better spent on growing your business!
If you are writing your own contract templates, here are the 10 minimum clauses you must include
THE 10 MINIMUM CLAUSES YOU MUST HAVE IN YOUR EMPLOYMENT CONTRACTS
1. The agreeing parties:
This is the legal names of the employee and the employer.
2. The type of employment the employee will be undertaking:
This may be permanent, fixed term, casual. Remember, there are specific requirements and considerations for those who are employment on a fixed term or casual basis.
3. The job title and a description of the work which will be undertaken:
Often a description of work is attached as an appendix and is either the full job specification or a summary of the role. This ensures it is very clear as to what is expected of the employee. It is important businesses remember to add the specific appendix if it is referenced.
4. The location or place of work:
This is the location of your business. Sometimes it may be difficult to provide if the role is one which requires travel but a home base or a head office would be suitable if possible.
5. The wage or salary rate:
The rate must be equal or greater than the relevant minimum wage.
6. How wages will be paid to the employee:
The agreement should clearly state the method of payment of wages (i.e. direct credit) and frequency of payment (i.e. weekly, fortnightly or monthly).
7. The agreed hours the employee is expected:
The agreement should always state the minimum hours of work. The employee may, by agreement, work more but they will be entitled to payment for any minimum hours under their employment contract.
8. An explanation of how grievances, complaints or employment relationship problems will be resolved.
This should include advice on where to seek help, the process for raising issues and should stipulate that personal grievances must be raised within ninety (90) days.
9. Details of payment if an employee works on public holidays.
Regardless of whether the business normally operates on a Public Holiday, the contract must contain advice on what would occur if the employee were to work on a Public Holiday. Employees must receive at least time and a half payment for working on a public holiday.
10. An employment protection provision
An employment agreement must outline the process if your company is sold or transferred, or if the employees work is later contracted out and how you will endeavour to protect the employee.
Additionally, for fixed term employees there is an 11th requirement! The agreement must confirm the length of the fixed term contract and the reasoning as to why this role is of a fixed-term nature. There are very specific reasons as to when an agreement can be fixed term (We would recommend you seek advice to confirm the reasons are lawful if you are unsure).
The Employee Relations Act (2000) requires details of employment terms to be contained in an employment contract which must be given to the employee before they commence employment An employment agreement should be signed by both the you and the employee, although it can still be valid without signatures. You must keep a signed copy of any employment agreements. If an employee has not signed the agreement, you must still retain this as a “intended agreement”. Employees are entitled to a copy of their employment agreement at any time if they request it.
The drafting of employment contracts is a complex and important task which has long-standing impact on the employee / employer relationship. It is often the first official document received by a new employee and as such it can set the tone for the ongoing working relationship and sets important expectations for both parties.
Your business may have very specific clauses you wish to include that relate to your business operations. It is important to have these drafted correctly to ensure they provide the protection or clarity that your business requires.
Remember: a well drafted employment contract can reduce cost and time!
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