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Contractual spring-clean, anyone?

01 Oct 2018

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By Janice Hughes, Director, Aspiring Law

Spring has sprung, the grass has riz … and, to all you employers out there, I wonder what the state of your employment contracts is.

I’d hazard a guess and say, for many businesses, these vital pieces of documentation could do with a little spring-clean. If you haven’t already done so, now’s the time to dust them off and check that all’s in order or, deep breath, that they exist at all.

Employment law is, to say the least, dynamic and we are, arguably, in amidst the most change we’ve seen in many a year … with more to come. Keeping up is, typically, not quite so challenging for those businesses with dedicated in-house lawyers and human resources staff to monitor and implement the changes, but I know leaner operations often struggle to keep up with the ever-changing legislative times.

I’ve said it before … and I’ll say it again: unfortunately, ignorance and “busyness” are no defence. No matter how lengthy your “to-do” list, understanding and managing your employment relationships – contracts and all – should be a “must do” for all employers.

Spruce-up time

If wielding the feather duster’s still looking too much of a chore, New Zealand case law and the ever-increasing fines and penalties coming out of the Employment Relations Authority and Employment Court provide a plethora of incentives. In short, the effort required in giving your contracts a spruce-up and updating yourself on the latest requirements is nothing compared to the time, money, effort and stress involved in getting it wrong.

In my experience, employers have wildly varying approaches to employment agreements. There are those who keep up with the play, take the appropriate advice, ensure contracts are updated accordingly and have a sound knowledge of the procedural steps needed if a workplace relationship starts to wobble.

Somewhere in the middle are the employers who “give it a crack”, cobbling together contracts, using their own interpretation of the law, or – gasp – a hodgepodge of clauses they’ve found online. By all means, have a go at writing up an agreement, but always, always, always have a lawyer check it. There’s no standard cover-all employment contract: each workplace has issues peculiar to it that may need to be reflected; clauses must be carefully worded, and legislative amendments included … and that’s just for starters.

Employing on a wing and a prayer

And then, deep breath again, we have the employers who have zilch – bar, perhaps, a handshake.

A handshake on the back of some informal arrangement will be next to worthless if things turn to custard. What’s more, you’re breaking the law. Since the inception of the Employment Relations Act in 2000, it is mandatory for all employer-employee relationships to be bound by a formal, written agreement.

If things do get litigious, the law frowns on employers who don’t have agreements in place – chances are, no matter how strong your case, you’ll be starting very much on the back foot.

Not only is a sound agreement – and adherence to it – your greatest defence if a dispute makes it to the Employment Relations Authority or the Employment Court, but it’s also probably your best shot to avoid escalation in the first place.

Maintaining a constant eye on employment changes and taking the right advice will ensure your agreements are in order, you’re up to speed with the latest changes and should also alert you to any potential pitfalls. You’ll also come away with a better understanding of how to prevent and address problems.

A quality contract puts everyone on the same page, providing an agreed framework for both the employer and the employee. Obligations, responsibilities and entitlements are spelled out clearly so both parties know from the outset what’s expected, thus lessening the chances of misunderstandings and breaches, intentional or not.

Contractual complacency

Complacency can creep in when employers believe their workplace is solid as, and that they’ll never have problems. Big warning: I’ve seen plenty of close-knit, happy working relationships disintegrate quickly and, especially where there’s no up-to-date contract in place, the toll it can take.

Taking stock of your employment contracts is not an optional extra; it really is one of those “stitch in time” necessities in business. If a dispute arises, it’ll be the difference between desperately wishing you had and being so glad you did.

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