Employment agreements

Once you have decided on your successful candidate you make an offer of employment. Note: an "employee", in terms of the Employment Relations Act 2000 (ERA) includes a "person intending to work". In other words, once an offer of employment is made and accepted, whether in writing or orally, then that person is "intending to work", and thus is an employee, with all the rights of an employee under the ERA.

At present, the most common form of agreement for Church employees, is the Individual Employment Agreement. The ERA requires that before the employee enters into an individual agreement, the employer must:

  • provide a copy of the agreement that complies with the ERA
  • advise the employee that s/he is entitled to seek independent advice about the agreement
  • give the employee a reasonable opportunity to seek that advice
  • For an individual agreement to comply with the Act, it must be in writing and must include:
    • the name of the employer and employee
    • a description of the work to be performed by the employee
    • an indication of the place of work
    • an indication of the work hours
    • the employee’s statutory entitlements where they work on a public holiday
    • a plain language explanation of the services available for the resolution of employment problems
    • a plain-language explanation of what will happen in the event part of the business is sold
    • If offering a trial or probationary period this must also be included. Further recruitment information.

Equally obviously, the draft agreement must be drawn up for the prospective employee to consider before they begin their period of employment. This means that an offer of employment (subject to signing an employment agreement) will need to have been made. This is usually done orally. The "negotiable" details to be included in the draft agreement - salary, sick and annual leave provisions, amount of any redundancy payments and so forth - will usually be discussed and agreed upon at this point. It is prudent to have an agreement signed before the employee commences work.

We recommend using the Department of Labour agreement builder

Open and Fixed term Agreements

The intended term of an Individual Employment Agreement can create difficulties for the employer. These agreements can be either open or fixed term (i.e. the period of employment has a termination date).

The ERA places clear restrictions on the use of fixed term agreements. It specifies that an employee and employer may agree that the employment of the employee will end:

a) at the close of a specified date or period; or
b) on the occurrence of a specified event;
c) or at the conclusion of a specified project.

However, before that can happen, the employer must:

a) have genuine reasons based on reasonable grounds for specifying that the employment will end in one of those three ways; and
b) advise the employee of when and how his or her for employment will end and the reasons for his or her employment ending in that way.

You should also note that the following are not accepted as being genuine reasons for having a fixed term agreement:

a) to exclude or limit the rights of the employee under the ERA (e.g. to avoid paying severance);
b) to establish the suitability of the employee for permanent employment (e.g. employ on a 6 month agreement, and, if all goes well, place on an open term agreement at the end of that time).

Some examples of where a fixed term agreement would be appropriate are:

a) where a restructuring of the parish office is to take place and an interim appointment is needed;
b) a specific project is to be completed
c) a replacement is required for a staff member on leave (e.g. sabbatical, parental etc)

The general approach to deciding whether to have a fixed term or open term agreement is: all agreements should be open term unless you have sound reasons (which match one of the three reasons listed above) for a fixed term agreement being required.

Probation Clauses

A probation clause is one that specifies that the employee is on a probation or trial period for the first few months (usually 6 months) of their employment. During this term the employee's performance is assessed, and all being well, is confirmed in their role as a permanent employee. If the performance is not satisfactory, they can be dismissed. NB This is not the same as a trial period.

Such clauses are rather illusory in the feeling of "safety" they give the employer in dismissing a new appointee for poor performance. The ERA specifies that, where the parties agree to the employee serving a period of probation or trial:

a) the fact of the probation or trial period must be specified in writing in the agreement ; and

b) neither the fact that the probation or trial period is specified, or what is specified in respect of it, affects the application of the law relating to unjustifiable dismissal in a situation where the dismissal is made in reliance on that agreement during or at the end of the trial period.

A dismissal can never be made without just cause and without going through due process. In other words, having a probation clause does not mean an employer is exempt from going through due process if that employer wishes to discipline or dismiss an employee.

Redundancy Clauses

A redundancy clause does not normally appear in a fixed term agreement. It is not mandatory in an open term agreement either; however it is still recommended that you include a process for working through a restructure or redundancy (notice period, right for employee to be consulted etc) to avoid misunderstanding should the role be disestablished.

Redundancy compensation is not required but again if you do not intend, or are unable to pay compensation then you are recommended to make this clear from the outset.

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