Employment Contracts

Employment Agreements Protect Your Business – Here’s How!

Employment Contract Law may seem complicated and the last thing any employer wants to do is to end up in court defending Personal Grievances that could have been avoided.

The best place to start is with a sound Individual Employment Agreement (IEA). Professionally written IEA’s safeguard employers against personal grievances.

With the average compensation awarded in the Employment Relations Authority being $10,000 plus, investing in your IEA’s and checking they are up to date makes sense, doesn’t it?

In this article, you will find a brief overview of:

  • Who is classed as an employee?

  • Client examples of IEA presentation

  • Legal must-have clauses for IEAs

  • Clauses we suggest you include in your agreements.

Who is classed as an employee?

It might sound basic, but there are many examples of where seasonal and casual employees did not have IEA’s so we start by outlining exactly who is classed as an employee.

An employee is a person who has agreed to be employed to work for some form of payment under a contract of service

Employees include:    

  • people who have been offered and have accepted a job, but are yet to start working

  • permanent employees (full-time and part-time)

  • fixed-term employees (full-time and part-time)

  • casual employees

  • homeworkers

  • seasonal employees

  • employees on probationary and trial periods

  • employees in a triangular employment situation.

An employee is not:

  • a self-employed or independent contractor

  • a volunteer who does not receive a reward for working

  • a sharemilker

  • a real estate agent whose agreement says they are an independent contractor

  • in some cases, a person who works in film production.

Client examples of IEA Presentations

One of our clients provides written IEA’s that only contain the nine mandatory clauses within them. She attaches a comprehensive list of Procedures and Policies (P & P) that are written in simple English stating they form part of the IEA. This saves repetitive clauses which are often ambiguous. She also provides comprehensive Job Descriptions.

Other clients use a more comprehensive written IEA with Policy and Procedures provided in a separate document. Often clauses that are covered in the IEA are repeated in the Policy and Procedures booklet which seems unnecessary as the IEA has more standing in the courts.

Both examples have provided Job Descriptions with their IEA’s.

Our recommendation is to provide a comprehensive IEA written in plain English with a shorter P and P dealing with minor concerns.

Legal must-have clauses for IEAs

According to employment contract law employment agreements must have certain clauses. These are referred to as mandatory IEA clauses and include:

  1. The names of the employer and the employee.

  2. A description of the work to be performed (keep a copy of the job description with the employment agreement).

  3. An indication of the place of work.

  4. The agreed hours.

  5. The wage rate or salary payable and how it will be paid.

  6. A plain explanation of how to help resolve employment relationship problems.

  7. A statement that the employee will get (at least) time-and-a-half payment for working on a public holiday.

  8. An employment protection provision to apply if the employer’s business is sold or transferred, or if the employee’s work is contracted out.

  9. The nature of the employment – for example, if the employment is fixed-term or permanent.

Clauses we personally suggest you include in your agreements

Incapacity Clause

If one of your staff has an accident and will need an unknown period of recovery time, an incapacity clause will enable you to bring in temporary staff to fill their space and enable dismissal on grounds on incapacity after a reasonable period of time. This involves liaising with their medical doctors, ACC and recovery providers like physiotherapists. An incapacity clause is vital.

Protection of Confidential Information, Copyright and Intellectual Property Clause

Some of your employees will have access to your confidential information like business plans, client lists and trade secrets.  Every contract of employment (whether in writing or not) should place a duty on the employee to keep their employer’s confidential information confidential; a duty which applies during and after the employment terminates.

Social Media Clause

Social Media is a breeding ground for unwitting damaging remarks and pictures by employees against their employers which can bring their employers into disrepute. A social media clause which clearly lays out common-sense guidelines for use of work emails and what acceptable content is, provides boundaries for the employees. Social media policy should refer to non-use of their employer’s name on their personal email or detrimental comments about any of their colleagues. I have represented several employees who wished they had stuck to their employer’s social media policy.

You can keep an eye out for updates to employment law by an occasional visit to www.employment.govt.nz  which will help. Even now I come across agreements with references to the Department of Labour which became part of MBIE on 1 July 2012.

Remember, you can also book a complimentary 20-minute call to discuss your specific questions pertaining to Employment Agreements or any other matter related to Employment Contract Law.


All the best for 2021. Let’s all rock it!