The following are examples of common mistakes that employers make that can be easily avoided.
Negotiating terms of employment agreement
Section 63A of the Employment Relations Act 2000 (“the Act”) provides that the employer must do at least the following things when bargaining for terms and conditions of an individual employment agreement with a prospective employee:
- provide to the employee a copy of the intended agreement under discussion;
- advise the employee that he or she is entitled to seek independent advice about the intended agreement;
- give the employee a reasonable opportunity to seek that advice; and
- consider any issues that the employee raises and respond to them.
Retaining copies of employment agreement
Section 64 of the Act provides that an employer must retain a signed copy of the employee’s individual employment agreement or the current terms and conditions of employment that make up the employee’s individual terms and conditions of employment. If requested by the employee, the employer must, as soon as is reasonably practicable, provide the employee with a copy of the employee’s employment agreement.
Every employer who fails to comply with these sections is liable to a penalty imposed by the Employment Relations Authority.
Recently, the Employment Relations Authority ordered a labour contracting business, Dara Miah Horticulture Limited, and its sole director, to pay a $6,000 penalty plus costs for failing to provide written employment agreements and work records for its 15 employees.
Not having an adequate employment agreement
Not only is it important that the parties enter into a written employment agreement, and the employer retains a copy of the same, but it is vital that the agreement meets the minimum requirements prescribed by law.
It is also important that employers carefully consider situations that may arise and provide for this in the agreement. For example:
- If an employee is not meeting the employer’s performance expectations, is there a fair and reasonable process set out in the agreement that must be followed?
- What happens where a position in the business is made redundant?What process must be followed?Is there a specific process to be followed whereby there is a “technical redundancy” (the business is being sold to a new employer who wants to retain the existing staff)?
- Should the employer test employees for drugs and/or alcohol in the workplace and is there a lawful clause in the employment agreement that provides the method of undertaking this?
- What can an employer do if an employee is unable to attend work due to illness or injury for a long period of time?
An employer needs to be very careful that the employment relationship that the employer is intending to create / has created is truly “casual”.
A casual employment relationship is extremely different to a “normal” employment relationship. Broadly speaking, casual employment is undertaken when an employee is employed to work on an “as and when required” basis by an employer. The work is typically for a specific purpose over a short period of time. There is no ongoing expectation of employment by either party.
As soon as the employee develops a pattern of work, for example being placed on a roster, it is more likely than not that this person is no longer a casual employee and is to be treated as a permanent part-time or full-time employee (despite the employment agreement specifying that the relationship is casual).
90 day trial period
The 90 day trial period is not as simple to utilise as is often assumed. We would recommend that employers seek legal advice prior to terminating an employee during the 90 day trial period (and ideally prior to employing that employee!)
Because the trial period legislation effectively removes some important protections from an employee, the provisions are likely to be interpreted strictly by the courts. A summary of the important factors are outlined below:
- The appropriate trial clause must be in the employment agreement, and such clause must comply with the requirements of the Employment Relations Act 2000;
- The employment agreement must be signed before the employee commences work.Trial period clauses are only applicable to new employees. It is important to ensure that the employment agreement is signed prior to the Employee commencing work. Otherwise, this clause cannot be invoked as there is an argument that the Employee is no longer a “new employee” (even if they have only worked for the Employer for one day or less);
- Dismissal must be on notice (and in accordance with the trial provision in the employment agreement);
- An employer needs to advise the employee why they are terminating (this does not need to be in written form and must be done carefully, so as not to open them up to a disadvantage or other grievance);
- The employee cannot bring a grievance if dismissed under the 90 day trial period for unjustified dismissal. However, the employee can still bring other types of grievances against the employer, such as unjustified disadvantage.