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Employment Law – Part 2

Part two of this blog covers off the different types of employment contracts and the benefits and pitfalls of them, plus a few of the choice clauses within the contracts that tend to come up as part of employment discussion.

Trial Periods

The courts have adopted a strict interpretation of these clauses against the employer in all cases. The trial period takes away employee rights and is now limited to persons who have not been previously employed by the employer. The issue arises as to when the person started work as the Act includes a person intending to work as an employee. The trial period must be included in the employment agreement and the employee must sign it before starting work.

The best practice is to give the employee the contract and offer of employment several days before they start working so they can get advise on the contract. If they turn up for work without the contract signed send them home to get it otherwise the trial period will be invalid.

The requirements of the trial period are contained in ss67 A and B of the Act and all three elements must be referred to. Make sure that the number of days is a figure not more than 90. Again advice on the drafting of the clause is vital.

Fixed Term

These contracts must be in writing and can only be for the incidences permitted in the Act, s 68. If the reason for the fixed term or the period rolls over the Court will hold that the agreement is a permanent full-time agreement and you will be in trouble if you terminate on this ground.

Casual

This is a much misused term. The case law is clear that the issue is not so much what happens during the employment relationship but what happens between the periods of employment. Is there an expectation of further work and if there is then the relationship is not casual.

So just because the hours are not fixed or are irregular this does not in itself make for a casual contract. Once a person is placed on a roster or there is a reasonable period of continuous employment the argument arises that the person is not truly casual and the usual termination procedures apply.

Indenpendant Contractor

This is an often misused term. Very common in the rebuild in Canterbury but more often than not overturned as being an employment agreement by another name. In Bryson v Three Foot Six the court held that there are a number of factors to be considered.

One is the degree of control between the parties. The fact that the person is not paying PAYE is not the determining factor at all. One recent issue is whether the “contractor “had his own public liability insurance as was required on the work site.

Restraint of Trade/non solicitation

The Courts traditionally dislike these clauses with non-solicitation clauses being preferred. The question you need to ask is whether you have some form of trade secret you need to protect. These maybe actual patents or confidential information or customers relationships.

The area of restraint cannot be too wide or too long. A non solicitation period may be more suitable to protect client relationships. However, these are not a one clause fits all and specialist advice is essential.

Pre-employment negotiations

As with any contract the pre contractual representations are important. Also the Fair Trading Act has misleading and deceptive conduct prohibitions as does the Employment Relations Act in s4. Good notes are essential.

Evolving Agreement

Remember that as the employment relationship evolves so does the agreement. It will be difficult to go back to rely on the contract if your practices and procedures have not followed the contract. You will find the Authority or the Court finding that the agreement has been amended by conduct.

The relationship

Once the relationship has started both parties are under the obligations of good faith in s4. Both parties have an obligation to be active and constructive in establishing and maintaining a productive employment relationship in which the parties are, among other things, responsive and communicative.

Much has been written on this but it requires the parties to be active and not passive. To be responsive to communication from the other and to communicate their issues and problems they are having with each other. Sounds easy but difficult when busy.

Have questions?

If you have any questions at all about this topic, or require any assistance with employment law in general, please get in touch directly as per the details below. Michael McDonald Madeley Consulting michael@madeleyconsulting.com 021 709 404

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